EMERGING MARKETS-Latam currencies weaken on Fed's Yellen comments
SAO PAULO, July 15 (Reuters) - Latin American currencies weakened on Tuesday after comments from Federal Reserve Chair Janet Yellen stoked investors' expectations that U.S. interest rates are set to rise sooner rather than later. The region's equity markets were little changed, with the MSCI Latin American stock index down 0.5 percent. Most of Latin America's currencies started the day in slightly weaker territory following retail and manufacturing data from the United States that showed the world's largest economy is gaining steam. Regional currencies accelerated losses later in the session on Tuesday after Yellen made comments to a Senate committee that many investors viewed as slightly hawkish, or more likely to favor higher U.S. interest rates. In particular, she suggested that should the labor market continue to improve at its current pace, interest rates could rise more quickly than currently expected. "The question is whether this is just a door opener to the possibility that the economy may be improving or whether it is a warning flare that the Fed sees the economy as stronger than anticipated," Citi strategist Steven Englander wrote in a client note. "The market is correct in seeing glimmers of hawkishness relative to the past and the absence of any new dovish surprises." Brazil's real posted its biggest one-day drop against the dollar in nearly two weeks, while Colombia's peso fell for the third straight session. Chile's peso weakened its most in nearly a month as the country's central bank prepared to announce its benchmark interest-rate decision later in the day. In a Reuters poll, 10 analysts predicted the bank will maintain the rate at 4.0 percent, while six said it will likely be reduced by 25 basis points. Over half of the 56 analysts in a central bank poll published on Thursday predicted a cut. In equity markets, Brazil's Bovespa index was nearly unchanged, though shares of meatpacker Marfrig Global Foods SA jumped 7.5 percent after Merrill Lynch analysts raised their recommendation on the shares to "buy" from "neutral." Mexican and Chilean stock markets were also little changed. Key Latin American stock indexes and currencies at 1610 GMT: Stock indexes: Latest Daily YTD pct pct change change MSCI Emerging Markets 1,065.64 0.19 6.08 MSCI LatAm 3,463.83 -0.48 8.73 Brazil Bovespa 55,716.27 -0.05 8.17 Mexico IPC 43,878.05 -0.2 2.69 Chile IPSA 3,964.58 -0.01 7.17 Chile IGPA 19,291.36 -0.01 5.84 Argentina MerVal 8,701.859 -1.56 61.41 Colombia IGBC 13,699.91 -0.96 4.81 Peru IGRA 17,013.98 -0.31 8.00 Venezuela IBC 2,103.4 0 -23.14 Currencies: Daily YTD pct pct change Latest change Brazil real 2.2242 -0.64 5.96 Mexico peso 12.9675 -0.10 0.48 Chile peso 557 -0.63 -5.55 Colombia peso 1,869.65 -0.51 3.33 Peru sol 2.784 -0.11 0.32 Argentina peso (interbank) 8.1500 0.03 -20.34 Argentina peso (parallel) 12.15 -0.82 -17.70 (Reporting by Asher Levine, editing by G Crosse)
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