EMERGING MARKETS-Brazil's stocks, currency slump on news of Lula cabinet appointment

martes 15 de marzo de 2016 12:35 GYT

By Bruno Federowski
    SAO PAULO, March 15 (Reuters) - Brazil's stocks and currency
fell on Tuesday on reports that former President Luiz Inacio
Lula da Silva had accepted a cabinet position in President Dilma
Rousseff's government, possibly reducing support among lawmakers
for her ouster.
    Investors also feared the move could herald a return to
fiscal stimulus policies that many blame for dragging Brazil
into what could be its deepest recession on record.
    Lula, long the public face of Rousseff's Workers Party, is
facing charges of money laundering as part of the biggest
corruption probe in the country's history, centered on
state-controlled oil company Petroleo Brasileiro SA,
also known as Petrobras. 
    A source told Reuters Lula has accepted to take the cabinet
post and will meet with Rousseff later on Tuesday to discuss the
appointment. This would allow Lula some protection
from an investigation into money laundering charges. It also
could give him time to negotiate with Rousseff's allies in
Congress, who have all but jumped ship as calls for hear
impeachment grow.
    "This is the government's last defense against an
impeachment," said Francisco Carvalho, head FX trader at BGC
Liquidez brokerage in São Paulo.
    Brazil's stocks and currency slid on Tuesday after reaching
their highest since mid-2015 on Friday ahead of massive
demonstrations against the President.
    Shares of Petrobras slumped more than 10 percent, its worst
daily performance in over a year, also hit by a drop in crude
prices. The stock looked set to post its biggest two-day loss
since 2008. 
    Shares of state-run lender Banco do Brasil SA 
tumbled 16 percent on fears that the government could use public
credit to stimulate economic growth.
    Brazilian credit default swaps and dollar bond yields also
jumped as investors demanded higher returns to compensate for
increased political risk. 

    Key Latin American stock indexes and currencies at 1540 GMT:
 Stock indexes                               daily %   YTD %
                                              change  change
 MSCI Emerging Markets               788.84    -1.82    1.17
 MSCI LatAm                         1969.82    -4.37   12.58
 Brazil Bovespa                    46796.63    -4.24    7.95
 Mexico IPC                        44397.46    -0.66    3.30
 Chile IPSA                         3848.04    -0.23    4.56
 Chile IGPA                        18858.13    -0.17    3.89
 Argentina MerVal                  12110.37    -3.47    3.73
 Colombia IGBC                      9546.12    -0.66   11.69
 Venezuela IBC                     15571.01    -0.04    6.74
 Currencies                                  daily %   YTD %
                                              change  change
 Brazil real                         3.7527    -2.70    5.18
 Mexico peso                        17.9430    -1.10   -3.97
 Chile peso                           686.3    -0.70    3.41
 Colombia peso                      3180.95    -0.85   -0.37
 Peru sol                            3.3391    -0.21    2.24
 Argentina peso (interbank)         14.5700     1.58  -10.90
 Argentina peso (parallel)            15.45     1.04   -7.64

 (Reporting by Bruno Federowski; Editing by Diane Craft)