EMERGING MARKETS-Brazil stocks, currency slump on Lula cabinet nod
(Updates with closing prices) By Bruno Federowski SAO PAULO, March 15 (Reuters) - Brazil's stocks and currency fell on Tuesday on news 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. Presidential aides said Lula had decided to accept a ministerial position in Rousseff's Cabinet, a move that would offer him protection in the short term from prosecutors who have charged him with money laundering and fraud. It could also give him time to negotiate with Rousseff's allies in Congress, who have all but jumped ship as calls for her 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. The real lost 3.03 percent against the U.S. dollar, while the Bovespa stock index fell 3.56 percent. Shares of Petrobras slumped more than 10 percent, their worst daily performance in over a year, also hit by a drop in crude oil prices. Shares of state-run lender Banco do Brasil SA tumbled 21.2 percent on fears that the government could use public credit to stimulate economic growth. In Mexico, the peso fell nearly 1 percent against the dollar, while the IPC stock index dropped 1.08 percent. Key Latin American stock indexes and currencies at 1540 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 790.68 -1.59 -0.44 MSCI LatAm 1,980.50 -3.86 8.24 Brazil Bovespa 47,130.02 -3.56 8.72 Mexico IPC 44,210.44 -1.08 2.87 Chile IPSA 3,851.28 -0.14 4.65 Chile IGPA 18,872.13 -0.1 3.97 Argentina MerVal 12,076.37 -3.74 3.44 Colombia IGBC 9,492.49 -1.21 11.06 Venezuela IBC 15,292.30 -1.83 4.83 Currencies Latest Daily YTD pct pct change change Brazil real 3.763 -3.03 N/A Mexico peso 17.887 -0.8 N/A (Reporting by Bruno Federowski; Editing by Gabriel Stargardter, Simon Gardner and James Dalgleish)
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