EMERGING MARKETS-Latam currencies, stocks weaken on Russia concerns
SAO PAULO, Aug 7 (Reuters) - Latin American currencies and stocks weakened on Thursday as increasing geopolitical tension in Eastern Europe drove investors toward safe-haven assets such as the U.S. dollar. Russia said on Wednesday it would ban all food imports from the United States and all fruit and vegetables from Europe in a stronger-than-expected answer to Western sanctions for Moscow's support for separatists in Ukraine. The move led to a drop in risk appetite, further fueling a general investor retreat from emerging markets. Brazil's currency, the real, weakened past 2.29 per dollar in afternoon trading. Some traders see the central bank shifting the goalposts for its informal trading band, which it defends through market interventions, to 2.25 - 2.30 reais per dollar from a current range of 2.20-2.25. Central bank director Carlos Hamilton Araujo said on Thursday that he expects inflation to ease even if the real depreciates further. "The situation abroad is complicated, we have elections here, and historically we've seen higher demand for dollars in the second half of the year," said Reginaldo Siaca, head of currency trading for Sao Paulo's Advanced Corretora. The outlook for October's presidential elections drove volatility in Brazil's stock market as investors positioned for the expected release of an electoral poll later in the day. Many investors see a defeat of President Dilma Rousseff as a potential boon to state-run companies such as oil producer Petroleo Brasileiro SA, known as Petrobras. Petrobras preferred shares snapped a three-day rally, falling nearly 2 percent. In Mexico, both the peso and the benchmark IPC stock index lost about 0.3 percent after data showed inflation in the 12 months through July rose to a five-month high. Peru's central bank is expected to cut interest rates by 25 basis points later on Thursday as it looks to counter sluggish economic growth. The Peruvian nuevo sol edged lower. Key Latin American stock indexes and currencies at 1634 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1049.67 -0.67 5.39 MSCI LatAm 3393.83 -0.96 7.06 Brazil Bovespa 56040.82 -0.79 8.80 Mexico IPC 44292.04 -0.3 3.66 Chile IPSA 3917.16 -0.16 5.89 Chile IGPA 19107.61 -0.13 4.83 Argentina MerVal 8238.989 1.31 52.83 Colombia IGBC 14204.86 -0.4 8.67 Peru IGRA 16945 0.28 7.56 Venezuela IBC 2148.55 -1.69 -21.49 Currencies daily % YTD % change change Latest Brazil real 2.2913 -0.79 2.86 Mexico peso 13.2877 -0.36 -1.94 Chile peso 577.6 -0.09 -8.92 Colombia peso 1884.1 0.09 2.54 Peru sol 2.811 -0.11 -0.64 Argentina peso (interbank) 8.2700 0.00 -21.49 Argentina peso (parallel) 12.75 0.39 -21.57 (Reporting by Bruno Federowski; Writing by Asher Levine; editing by Andrew Hay)
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