November 2, 2016 / 1:52 AM / 2 years ago

EMERGING MARKETS-Mexico, Brazil currencies fall on U.S. election concerns

(Updates with final prices)
    By Bruno Federowski
    SAO PAULO, Nov 1 (Reuters) - The Brazilian and Mexican
currencies weakened sharply on Tuesday on jitters about the
outcome of the U.S. presidential election, and U.S. data that
reinforced expectations that the Federal Reserve would raise
interest rates in December.
    Polls showed that Republican candidate Donald Trump had
closed the gap on his Democratic rival Hillary Clinton ahead of
the Nov. 8 vote, spooking investors who fear Trump's threats to
tear up a trade deal with Mexico could batter Latin America's
biggest exporting nation.
    The Mexican peso  fell by more than 1.7
percent to its lowest level in more than three weeks while the
Brazilian real declined by 1.6 percent. Brazilian and
Mexican markets will be closed on Wednesday due to a local
    Separately, activity in the U.S. manufacturing sector
expanded in October at the fastest pace in a year, according to
Markit's purchasing managers' index. 
    After the report's release, December fed funds futures
implied traders saw a bigger chance that the Fed would raise
interest rates at its Dec. 13-14 policy meeting, according to
CME Group's FedWatch program. 
    Brazil's benchmark Bovespa stock index tumbled 2.46
percent, weighed down by a 4.69 percent decline in shares of
state-controlled oil company Petróleo Brasileiro SA 
as traders booked profits on an 11 percent rally in October.
    Still, shares of planemaker Embraer SA rose 3.5
percent after some analysts raised their estimates for the firm
on a bullish outlook from executives on Monday. 
    Analysts at Goldman Sachs raised their price target for
Embraer's U.S.-listed shares to $26 from $23, citing
higher-than-expected margins in the third-quarter when excluding
non-recurring items.
    Key Latin American stock indexes and currencies at 2230 GMT:
 Stock indexes                                daily %    YTD %
                                               change   change
 MSCI Emerging Markets                900.52    -0.23    13.66
 MSCI LatAm                          2521.32    -3.48    37.79
 Brazil Bovespa                     63326.42    -2.46    46.08
 Mexico IPC                         47303.31    -1.47    10.07
 Colombia IGBC                      10165.90     0.79    18.94
 Venezuela IBC                      14911.82     1.51     2.22
 Currencies                                   daily %    YTD %
                                               change   change
 Brazil real                          3.2412    -1.61    21.78
 Mexico peso                          19.185    -1.72   -10.19
 Colombia peso                       3048.24    -1.37     3.97
 Argentina peso (interbank)          15.0600     0.63   -13.79
 Argentina peso (parallel)             15.38     1.17    -7.22

 (Reporting by Bruno Federowski; Editing by W Simon and Lisa
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