EMERGING MARKETS-Latam currencies fall sharply on global risk aversion
By Bruno Federowski SAO PAULO, April 5 (Reuters) - Latin American currencies weakened sharply on Tuesday as concerns over global growth, lower commodity prices and prospects of higher U.S. rates drove investors to the safety of the dollar. International Monetary Fund Managing Director Christine Lagarde warned on Tuesday of global economic risks, calling for stronger government action. Coupled with a round of weak European economic figures, the comments boosted financial market angst toward the global growth outlook, which took its toll on commodities prices. An unexpected shortfall in U.S. demand for oil also weighed on crude prices as the chance of a coordinated output cut seemed to fade away. Traders remained skittish following mixed messages by Federal Reserve policymakers as to when the U.S. central bank will increase rates. Strong services data supported expectations that a rate hike could come sooner rather than later, reducing the allure of higher-yielding - but higher-risk - emerging market assets. "There is a distinct whiff of risk aversion lingering over the markets," analysts with Scotiabank wrote in a research note. The Brazilian real fell more than its peers as traders pared bets on President Dilma Rousseff's ouster as her efforts to stave off impeachment grew in strength. Brazil's attorney general urged a congressional committee on Monday to discard impeachment charges against the leftist president. Nevertheless, the benchmark Bovespa stock index rose more than 1 percent on the back of a jump in Petrobras shares . The state-controlled oil company, formally known as Petroleo Brasileiro SA, earlier denied media reports that it planned to reduce domestic fuel prices. Shares of Vale SA also jumped after the miner agreed to sell its stake in a Brazilian steel plant to majority owner Thyssenkrupp for a token sum. Key Latin American stock indexes and currencies at 1600 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 811.93 -1.8 4.11 MSCI LatAm 2,078.28 -1.47 15.27 Brazil Bovespa 49,374.35 1.22 13.90 Mexico IPC 45,379.89 -0.65 5.59 Chile IPSA 3,929.74 -0.52 6.78 Chile IGPA 19,260.30 -0.46 6.11 Argentina MerVal 12,640.83 -1.12 8.27 Colombia IGBC 9,813.20 -0.81 14.81 Venezuela IBC 14,705.46 0.6 0.80 Currencies Latest Daily YTD pct pct change change Brazil real 3.6691 -1.53 7.57 Mexico peso 17.7365 -1.40 -2.86 Chile peso 674.7 -0.62 5.19 Colombia peso 3,084.05 -0.68 2.76 Peru sol 3.3591 -0.30 1.63 Argentina peso (interbank) 14.6600 0.48 -11.44 Argentina peso (parallel) 15.08 0.73 -5.37 (Reporting by Bruno Federowski; Additional reporting by Paula Arend Laier; Editing by XX)
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