May 9, 2016 / 5:16 PM / 2 years ago

EMERGING MARKETS-Brazil markets fall as Rousseff impeachment vote annulled

(Updates prices, adds comments)
    SAO PAULO, May 9 (Reuters) - Brazilian markets weakened on
Monday after the acting lower house speaker in Brazil's Congress
annulled an impeachment vote, though losses were pared as
investors bet the move would delay rather than prevent leftist
President Dilma Rousseff's removal from office.
    The Brazilian currency, the real , weakened 1.5
percent against the U.S. dollar, after falling about 5 percent
when the news broke.
    The country's benchmark Bovespa stock index slid 2
percent while the broader MSCI Latin American stock index
 was down 0.8 percent, also hurt by weaker
commodity prices following unfavorable economic data in China.
    The impeachment process was now expected to return to the
lower house, which had earlier voted overwhelmingly to oust
Rousseff. Markets rose in recent weeks on expectations Vice
President Michel Temer would take office and put austerity
measures in place to better control public spending.
    "I don't think it derails (impeachment). I think there's
still plenty of votes in both houses to impeach, but ... this
process is not going to be fast and easy," said Win Thin, head
of emerging market currency strategy at Brown Brothers Harriman.
    Shares of state-run oil firm Petrobras shed about
8 percent. Mining company Vale tumbled nearly 9
    Waldir Maranhao, who broke with his center-right Progressive
Party and voted against Rousseff's impeachment last month, took
over as acting speaker last week. He said there were procedural
flaws in the April 17 vote in the chamber approving the
impeachment charges against Rousseff.
    "It's by no means certain that Mr. Maranhao has the
authority to return the vote to the lower house, and the ensuing
confusion risks triggering a constitutional crisis," Neil
Shearing, chief emerging markets economist at Capital Economics,
wrote in a research note. 
    The impeachment proceedings are focused on Rousseff's
alleged manipulation of public accounts and not a sweeping
kickback scandal involving state oil company Petroleo Brasileiro
SA, commonly known as Petrobras.
    The process has been criticized because it was started by
Eduardo Cunha, the former lower house speaker who was removed
last week due to pending charges he took bribes. 
    Central bank director Altamir Lopes said the market
volatility was normal given the news, while speaking at a public
event in the northern city of Belem. 
    Shares of Brazilian meatpacker JBS fell 7
percent, also hurt by reports in newspaper O Globo that
witnesses in a corruption scandal had testified the company made
illegal campaign donations to Rousseff's campaign, allegations
the company denied. 
    Elsewhere in Latin America, Mexico's peso weakened 1.3
percent while Chile's peso was down 1.5 percent.
    Key Latin American stock indexes and currencies at 1432 GMT:
 Latin American market                                
 prices from Reuters                          
 Stock indexes          Latest     Daily pct   YTD pct
                                      change    change
 MSCI Emerging Markets     798.60      -0.84      1.41
 MSCI LatAm              2,116.88      -1.89     17.92
 Brazil Bovespa         50,618.07      -2.13     16.77
 Mexico IPC             45,072.82       -0.3      4.88
 Chile IPSA              3,979.68      -0.58      8.14
 Chile IGPA             19,589.06      -0.51      7.92
 Argentina MerVal       13,077.93      -2.79     12.01
 Colombia IGBC           9,602.81       0.22     12.35
 Venezuela IBC          15,357.17      -0.07      5.27
 Brazil real               3.5556      -1.49     11.01
 Mexico peso              18.1300      -1.38     -4.96
 Chile peso                 675.2      -1.51      5.11
 Colombia peso              2,957      -0.10      7.18
 Peru sol                  3.3439      -1.01      2.10
 Argentina peso           14.2275      -0.09     -8.75
 Argentina peso             14.51       0.21     -1.65
 (Reporting by Caroline Stauffer in Sao Paulo, Dion Rabouin in
New York and Alonso Soto in Belem; editing by G Crosse)
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