EMERGING MARKETS-Brazil shares, currency down on political woes; Petrobras drops
(Updates with final prices) By Bruno Federowski and Paula Arend Laier SAO PAULO, April 4 (Reuters) - Brazil's stocks and currency underperformed most Latin American peers on Monday as traders worried that President Dilma Rousseff's efforts to fight impeachment could prolong the country's year-long political crisis. Also pressuring shares of Petroleo Brasileiro SA was news the state-controlled oil company could cut fuel prices, reducing the indebted company's revenues. Petrobras, as the company is known, kept gasoline and diesel prices artificially low for years, but made up for some of those losses with hikes last year. A decrease would reflect lower oil prices abroad and weak demand at the recession-mired economy, local media reported over the weekend. "Despite these undeniably fair grounds, why do it now?" analysts with BTG Pactual wrote in a client note. "With the entire investment community avidly monitoring Brazil's political agenda, the timing of such a decision could be heavily misinterpreted, negating some of the hard work done in regaining investor confidence." Shares of sugar- and ethanol-related companies, such as Cosan SA Industria e Comercio, fell on the news. Traders also worried that a recent rally in Brazilian assets, triggered by expectations of leftist President Rousseff's ouster, could be overdone. Some cited nascent expectations that the government could gather enough votes in Congress to avoid her impeachment. The real closed down 1.45 percent against the U.S. dollar, and other Latin American currencies also weakened on the back of lower crude prices and expectations of higher U.S. interest rates. Boston Federal Reserve President Eric Rosengren said on Monday the U.S. central bank will likely raise rates sooner than markets currently expect, which could drain capital away from high-yielding emerging markets. Those expectations helped drive the Colombian peso lower, even after minutes from the central bank's last policy meeting hinted it will continue tightening policy over the following months. Key Latin American stock indexes and currencies at 2015 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 824.93 -0.15 4.04 MSCI LatAm 2,109.31 -2.41 15.27 Brazil Bovespa 48,751.32 -3.58 12.46 Mexico IPC 45,678.18 -0.84 6.28 Chile IPSA 3,950.13 0.07 7.33 Chile IGPA 19,350.11 0.05 6.60 Argentina MerVal 12,784.28 -3.00 9.50 Colombia IGBC 9,893.55 0.04 15.75 Venezuela IBC 14,617.92 -1.98 0.20 (Editing by James Dalgleish)
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