* Brazil's real slips on rate outlook, current account data * Commodity-linked currencies drop on weak prices * MSCI EM stocks eye worst day since Nov 2018 (Adds details, updates prices) By Ambar Warrick Jan 27 (Reuters) - Latin American assets slid on Monday as investors fretted over the potential economic damage of China's coronavirus outbreak, with Brazil's real touching its weakest level in nearly two months. Risk assets around the globe were sold off, with investors fleeing to safe havens amid widespread disruptions in the world's second-largest economy. Risk-exposed emerging markets bore the brunt of the selling. Some participants also noted that markets were locking in profits after rallying in the fourth quarter of 2019. Optimism over a Sino-U.S. trade truce, as well as an expected recovery in global growth had pushed up risk assets through the quarter. "The outbreak of the coronavirus has turned into the catalyst for the correction in risk assets," Mark McCormick, global head of FX strategy at TD Securities wrote in a note. "The market takes a step back from the reflation narrative, reflecting a mix of stretched positioning, excessive momentum, and frothy valuations. We don't think this is a fundamental shift but more of a technical washout." Brazil's real declined about 0.5%, touching its weakest level to the dollar since early December. Expectations of a further reduction in the country's already record-low interest rates- according to a central bank survey- further pressured the currency. Data also showed that a steep decline in the Brazil's trade surplus contributed to its widest current account deficit in four years. The MSCI's index of Latin American currencies touched its weakest level since early December, as the dollar rose on safe-haven demand. Commodity-linked currencies- the Chilean peso and the Colombian peso- tumbled as the prices of their respective exports fell amid fears of slowing industrial demand from China. Copper prices fell for a ninth straight session, while oil prices were at a three-month low. Mexico's peso fell despite data showing a strong uptick in November retail sales. Stocks in the country were set for their worst day in more than two years, dropping about 2.3%. MSCI's index for Latin American stocks tumbled more than 3% and was set for its worst session since November 2018. Brazil's Bovespa index was knocked off record high levels, shedding about 2.9%. Key Latin American stock indexes and currencies at 1912 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1102.79 -1.48 MSCI LatAm 2803.69 -3.11 Brazil Bovespa 114944.93 -2.9 Mexico IPC 44071.07 -2.37 Chile IPSA 4561.47 -1.71 Argentina MerVal 39768.56 -0.374 Colombia COLCAP 1627.40 -1.24 Currencies Latest Daily % change Brazil real 4.2043 -0.47 Mexico peso 18.8920 -0.54 Chile peso 787.6 -1.35 Colombia peso 3398.9 -1.06 Peru sol 3.331 -0.24 Argentina peso 60.1650 -0.11 (interbank) (Reporting by Shreyashi Sanyal and Ambar Warrick in Bengaluru; Editing by Chizu Nomiyama and Lisa Shumaker)
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