April 4, 2016 / 9:02 PM / 2 years ago

EMERGING MARKETS-Brazil shares, currency down on political woes; Petrobras drops

(Updates with final prices)
    By Bruno Federowski and Paula Arend Laier
    SAO PAULO, April 4 (Reuters) - Brazil's stocks and currency
underperformed most Latin American peers on Monday as traders
worried that President Dilma Rousseff's efforts to fight
impeachment could prolong the country's year-long political
    Also pressuring shares of Petroleo Brasileiro SA 
was news the state-controlled oil company could cut fuel prices,
reducing the indebted company's revenues. 
    Petrobras, as the company is known, kept gasoline and diesel
prices artificially low for years, but made up for some of those
losses with hikes last year.
    A decrease would reflect lower oil prices abroad and weak
demand at the recession-mired economy, local media reported over
the weekend.
    "Despite these undeniably fair grounds, why do it now?"
analysts with BTG Pactual wrote in a client note.
    "With the entire investment community avidly monitoring
Brazil's political agenda, the timing of such a decision could
be heavily misinterpreted, negating some of the hard work done
in regaining investor confidence."
    Shares of sugar- and ethanol-related companies, such as
Cosan SA Industria e Comercio, fell on the news.
    Traders also worried that a recent rally in Brazilian
assets, triggered by expectations of leftist President
Rousseff's ouster, could be overdone. Some cited nascent
expectations that the government could gather enough votes in
Congress to avoid her impeachment.
    The real closed down 1.45 percent against the U.S.
dollar, and other Latin American currencies also weakened on the
back of lower crude prices and expectations of higher U.S.
interest rates.
    Boston Federal Reserve President Eric Rosengren said on
Monday the U.S. central bank will likely raise rates sooner than
markets currently expect, which could drain capital away from
high-yielding emerging markets. 
    Those expectations helped drive the Colombian peso 
lower, even after minutes from the central bank's last policy
meeting hinted it will continue tightening policy over the
following months.
    Key Latin American stock indexes and currencies at 2015 GMT:
 Stock indexes                     Latest       Daily     YTD
                                                  pct     pct
                                               change  change
 MSCI Emerging Markets                824.93    -0.15    4.04
 MSCI LatAm                         2,109.31    -2.41   15.27
 Brazil Bovespa                    48,751.32    -3.58   12.46
 Mexico IPC                        45,678.18    -0.84    6.28
 Chile IPSA                         3,950.13     0.07    7.33
 Chile IGPA                        19,350.11     0.05    6.60
 Argentina MerVal                  12,784.28    -3.00    9.50
 Colombia IGBC                      9,893.55     0.04   15.75
 Venezuela IBC                     14,617.92    -1.98    0.20
 (Editing by James Dalgleish)
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