EMERGING MARKETS-Latam stocks and currencies slump on global growth concerns
(Updates prices) By Bruno Federowski SAO PAULO, April 7 (Reuters) - Latin American stocks and currencies largely slumped on Thursday as worries over global economic weakness drove investors away from risky assets. The Mexican peso fell the most in nearly three months to 17.91 per dollar, also hurt by a fall in oil prices. Like many Latin American countries, Mexico funds part of its budget with exports of commodities. Major central banks including the U.S. Federal Reserve and the European Central Bank flagged signs of tepid growth abroad this week. Their willingness to take policy action has done little to offset concerns about the economy. As a result, many traders have unwound trades seeking to benefit from wide interest rate spreads. The Japanese yen , a common source of funding for transactions known as carry trades, hit a 17-month high against the dollar on Thursday. Local political issues were also a key driver as the Peruvian sol weakened for a fifth consecutive session ahead of the country's general elections on Sunday. The rise of leftist candidate Veronika Mendoza in opinion polls and promises of "radical change" displeased many traders, driving down the sol. Mendoza is polling head-to-head against investor-favorite Pedro Pablo Kuczynski for second place behind Keiko Fujimori. Fujimori is not expected to secure a majority, which would prolong the presidential race until a second-round vote. Strategists with Bank of America Merrill Lynch recommend clients sell the sol, aiming at a rate of 3.55 per dollar. The currency is currently trading near 3.40 to the dollar. "Given the wide differences in economic policy proposals by Kuczynski and Mendoza, coupled with poll results showing that the second round election would likely be competitive, uncertainty about the direction of economic policy in the next administration will likely increase," they wrote. Brazil's benchmark Bovespa index bucked the bearish trend, rising 0.7 percent, supported by financial shares. Local media on Thursday reported executives testified that President Dilma Rousseff's 2014 re-election campaign was partly funded by kickbacks from large infrastructure projects. The allegations could bolster the case for fresh elections, a move that many traders believe could help restore investor trust in the economy. Key Latin American stock indexes and currencies at 1959 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 807.50 -0.19 1.87 MSCI LatAm 2032.29 -0.67 11.81 Brazil Bovespa 48409.20 0.65 11.67 Mexico IPC 45052.91 -0.51 4.83 Chile IPSA 3890.16 0.17 5.70 Chile IGPA 19092.70 0.12 5.19 Argentina MerVal 11867.97 -3.21 1.65 Colombia IGBC 9704.00 -0.75 13.53 Venezuela IBC 15441.76 2.59 5.85 Currencies daily % YTD % change change Latest Brazil real 3.6931 -0.79 6.43 Mexico peso 17.8935 -1.44 -3.85 Chile peso 683 -1.31 3.76 Colombia peso 3105.5 -0.80 2.01 Peru sol 3.3941 -0.24 0.58 Argentina peso (interbank) 14.4500 1.16 -11.30 Argentina peso (parallel) 14.9 0.53 -4.41 (Reporting by Bruno Federowski; Additional reporting by Paula Arend Laier and Anna Yukhananov; Editing by Dan Grebler and Leslie Adler)
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