EMERGING MARKETS-Mexico peso, Latam markets plunge on oil slump, Fed comments
(Recasts with Fed comments, oil price fall; updates prices) BRASILIA, May 3 (Reuters) - Comments from U.S. Federal Reserve officials that raised the chances of higher interest rates this year weakened Latin American currencies on Tuesday, with the Mexican peso recording its biggest daily plunge in more than four years. The peso plunged 2.46 percent to 17.63 per dollar, its biggest drop since November 2011, as Fed officials raised the specter of an imminent U.S. central bank hike. Emerging markets fear higher U.S. rates could lead to an exodus of investors seeking less-risky assets with improving yields. San Francisco Fed President John Williams said he could support an interest rate hike in June given continued progress on the economy, while Atlanta Fed President Dennis Lockhart said two rate hikes this year were certainly possible. Weak economic data in China and Europe also re-ignited worries about global growth, while oil prices dropped for a second day. Mexico relies on oil revenue from state energy giant Pemex to fund about a fifth of its federal budget. Currencies of other oil-producers across the region were hit, with Colombia's peso sliding 2.86 percent to 2.914 per dollar, its worst slump since December, and Brazil's real falling more than 2 percent to 3.55 per greenback. Losses in the Brazilian real were intensified by ongoing central bank intervention. The bank offered reverse swaps for a third consecutive day on Tuesday as part of its broader efforts to curb currency gains. "All emerging currencies are weakening today. The central bank (intervention) is just the icing on the cake," said Pedro Tuesta, an economist with research firm 4Cast. Activity at China's factories shrank for the 14th straight month in April as demand stagnated, a private survey showed. China is a major buyer of Latin America's raw materials, from oil to Brazilian iron ore and Chilean copper. Tuesday's drop in Latin American markets contrasted with a strong first quarter, in which equities and currencies gained steadily on signs of renewed central bank efforts in the United States, Japan and Europe to boost economic growth. Key Latin American stock indexes and currencies at 2124 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 821.09 -1.73 3.39 MSCI LatAm 2,188.29 -3.08 19.59 Brazil Bovespa 52,260.19 -2.43 20.55 Mexico IPC 45,647.82 -0.13 6.21 Chile IPSA 4,001.36 -0.07 8.73 Chile IGPA 19,672.54 -0.04 8.38 Argentina MerVal 13,166.20 -2.82 12.77 Colombia IGBC 9,763.13 -1.73 14.22 Venezuela IBC 15,302.30 -2.02 4.89 (Reporting by Flavia Bohone, writing by Silvio Cascione, editing by G Crosse and Dan Grebler)
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