June 20, 2017 / 8:46 PM / a year ago

EMERGING MARKETS-Brazil stocks extend losses after labor reform rejected

 (Updates prices with close of stock markets)
    By Bruno Federowski
    SAO PAULO, June 20 (Reuters) - Brazil's stocks extended
losses on Tuesday after a Senate committee rejected a proposal
to streamline labor laws while falling oil prices hurt the
currencies of crude exporters.
    The labor law proposal in Brazil, rejected in the social
affairs committee by 10 to 9 votes, now moves to the
constitutional and justice committee before its heads to the
floor for a full vote.
    The Brazilian real weakened as much as 1.7 percent to
a one-month low to 3.34 to the dollar before recovering, while
the benchmark Bovespa stock index dropped 2.01 percent.
    Five-year Brazilian credit default swaps reached 242 basis
points, the highest since May 22.
    Traders feared a political scandal may have driven some
lawmakers to reconsider their support for other reforms,
including a proposal to cut pension spending seen as critical to
balancing the government budget.
    The news drove investors away from Brazilian assets, adding
to falling prices of commodities from iron ore to crude that
weighed on assets from wider emerging markets earlier on
    News of increased supply by several key oil producers
hammered crude futures to a seven-month low, reflecting
unsuccessful attempts by OPEC and others to support prices by
cutting output.
    That had the Colombian peso slipping 0.97 percent to
its weakest in a year. The Mexican peso was down 1.3
    Shares of oil companies tumbled, weighing on stock markets
in the region. Declining shares of Brazilian state-controlled
Petróleo Brasileiro SA subtracted the most points
from the Bovespa index. Shares of Colombia's Ecopetrol
dropped 2.9 percent.
    Brazilian miner Vale SA also fell as concerns
over Chinese demand for steel and global oversupply dragged iron
ore futures lower.
    Key Latin American stock indexes and currencies at 2027 GMT:
 Stock indexes                                daily %   YTD %
                                               change  change
 MSCI Emerging Markets               1008.67    -0.42   16.98
 MSCI LatAm                          2491.42       -2    6.44
 Brazil Bovespa                     60766.16    -2.01    0.89
 Mexico IPC                         49033.05    -0.28    7.43
 Chile IPSA                          4795.59     -0.6   15.52
 Chile IGPA                         24016.22    -0.58   15.83
 Argentina MerVal                   21657.19     1.71   28.01
 Colombia IGBC                      10789.74    -1.05    6.53
 Venezuela IBC                     118753.50    -0.13  274.56
 Currencies                                   daily %   YTD %
                                               change  change
 Brazil real                          3.3300    -0.01   -2.44
 Mexico peso                         18.1950    -1.29   14.01
 Chile peso                            663.7    -0.33    1.05
 Colombia peso                       3040.62    -2.15   -1.29
 Peru sol                              3.272    -0.18    4.34
 Argentina peso (interbank)          16.1350    -0.53   -1.61
 Argentina peso (parallel)             16.59    -0.36    1.39
 (Reporting by Bruno Federowski, additional reporting by Noel
Randewich in Mexico City; Editing by Steve Orlofsky)
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