May 3, 2017 / 4:30 PM / a year ago

EMERGING MARKETS-Brazil stocks down ahead of pension vote

    By Bruno Federowski
    SAO PAULO, May 3 (Reuters) - Brazilian stocks fell on
Wednesday following a mixed batch of corporate earnings and
ahead of a key vote on an overhaul of the country's pension
system in Congress.
    The benchmark Bovespa stock index slipped 0.9
percent after rising 2 percent on Tuesday, with many traders
taking a cautious stance as a congressional committee prepared
to vote on the planned pension reform.
    Investors see reduced pension spending as crucial to efforts
to rein in public debt and pull Brazil out of its deepest
recession in decades.
    Shares of lender Itaú Unibanco Holding SA
subtracted the most points from the index after rising defaults
kept it from cutting loan-loss provisions as much as investors
expected in the first quarter.
    Traders were also disappointed by Itaú's net income, which
came in only slightly above analyst forecasts. Many had bet on
stronger figures after earnings by rival Santander Brasil SA
 handily beat expectations.
    Shares of payment processor Cielo SA also slumped
as declining revenues fueled concerns over its outlook despite
higher-than-expected profits.
    The Brazilian real treaded water, in line with other
Latin American currencies. Still, traders expect the currency to
remain volatile in coming months on fears that lawmakers could
block key austerity measures, a Reuters poll showed.

    The Mexican peso fell 0.2 percent, while the
Colombian peso was flat. Traders have avoided big bets in
recent days ahead of the Federal Reserve's policy decision later
on Wednesday and key U.S. jobs data on Friday.
    The Fed is expected to keep rates stable but potentially
hint at a June hike. Higher U.S. rates tend to weigh on emerging
market assets, which often lure investors with the promise of
high returns.
    Key Latin American stock indexes and currencies at 1605 GMT:
 Stock indexes                              daily %    YTD %
                                             change   change
 MSCI Emerging Markets              985.60    -0.26     14.6
 MSCI LatAm                        2649.27    -0.49    13.74
 Brazil Bovespa                   66198.51    -0.78     9.91
 Mexico IPC                       49188.20    -0.81     7.77
 Chile IPSA                        4842.53    -0.73    16.65
 Chile IGPA                       24305.46    -0.66    17.22
 Colombia IGBC                    10188.87    -0.21     0.60
 Currencies                                 daily %    YTD %
                                             change   change
 Brazil real                        3.1469     0.15     3.25
 Mexico peso                       18.7980    -0.19    10.35
 Chile peso                          668.6    -0.06     0.31
 Colombia peso                      2928.9     0.34     2.48
 Peru sol                             3.25    -0.06     5.05
 Argentina peso (interbank)        15.2250     0.53     4.27
 Argentina peso (parallel)           15.84     0.82     6.19

 (Reporting by Bruno Federowski; Editing by Tom Brown)
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