EMERGING MARKETS-Brazil stocks drop on oil, Citi exit; Colombia peso down before cenbank meeting
By Bruno Federowski and Paula Arend Laier SAO PAULO, Feb 19 (Reuters) - Brazilian stocks dropped on Friday as oil prices resumed their decline, while shares of Santander Brasil SA slumped after rival Citigroup Inc announced plans to exit retail banking operations in Brazil, Argentina and Colombia. Citigroup's move means Spanish Banco Santander SA's Brazilian unit will be the last foreign bank in an increasingly concentrated market. Friday also marked the first day that many Santander Brasil executives were allowed to sell shares from their stock options, according to a source familiar with the matter. Shares of BM&F Bovespa SA fell after Brazil's sole financial exchange posted an unexpected fourth-quarter loss on impairment charges. Traders also assessed the implications of a potential acquisition of rival clearinghouse Cetip SA Mercados Organizados . Citigroup's announcement also helped drive down Colombia's peso, which had rebounded over the last two sessions. Slumping prices of oil, a main export and source of tax revenue, drove the currency to an all-time low last week. Traders expect Colombia's central bank to react by increasing its benchmark rate by 25 basis points for the sixth consecutive month later this Friday. Some say the bank could even increase the pace of tightening and hike rates by 50 basis points, a move so far supported only by a minority of policymakers. Yields paid on short-term futures contracts in Brazil were nearly unchanged after Alexandre Tombini, president of the central bank, said it was not considering cutting its benchmark rate. Short-term yields had risen on Thursday after a central bank director expressed a similar view. Data showing U.S. core inflation rose at the fastest pace in almost four and a half years also reduced demand for high-yielding assets. Traders said price pressure could allow a gradual rate of U.S. rate hikes, reducing the allure of emerging market bonds. Latin American stock indexes and currencies at 1455 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 739.95 -0.84 -6.03 MSCI LatAm 1743.53 -1.51 -3.25 Brazil Bovespa 41208.73 -0.65 -4.94 Mexico IPC 43522.62 0.01 1.27 Chile IPSA 3744.99 -0.62 1.76 Chile IGPA 18361.17 -0.53 1.16 Argentina MerVal 11791.62 -1.66 1.00 Colombia IGBC 9016.03 -0.31 5.48 Venezuela IBC 15922.55 -0.7 9.15 Currencies daily % YTD % change change Latest Brazil real 4.0611 -0.37 -2.81 Mexico peso 18.3250 -0.25 -5.98 Chile peso 699.8 0.53 1.41 Colombia peso 3350.54 -0.34 -5.41 Peru sol 3.5111 -0.12 -2.77 Argentina peso (interbank) 15.0100 0.40 -13.51 Argentina peso (parallel) 15.15 1.32 -5.81 (Reporting by Bruno Federowski and Paula Arend Laier; Editing by Daniel Flynn and Meredith Mazzilli)
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