March 21, 2017 / 7:11 PM / a year ago

EMERGING MARKETS-Brazil stocks slump on political concerns, falling iron ore prices

    By Bruno Federowski
    SAO PAULO, March 21 (Reuters) - Brazilian stocks fell
sharply on Tuesday as traders feared widening corruption
investigations could hamper government efforts to balance its
    Federal police raided the offices of people close to several
prominent senators in the latest phase of a three-year graft
    The 14 search and seizure warrants were based on information
provided by executives of engineering conglomerate Odebrecht SA
    A top Brazilian prosecutor told Reuters more than 350 new
investigations will spring from the testimonies, ensnaring top
congressmen, senior members of the executive branch and other
powerful figures.
    Traders worry that the investigations could make it harder
for President Michel Temer's administration to approve painful
structural reforms aimed at recovering investor trust. Brazil's
benchmark Bovespa stock index fell 2.8 percent, the
biggest decliner in the region.
    Miner Vale SA and key shareholder Bradespar SA
 fell the most, tracking a sharp drop in iron ore
    Shares of JBS SA and Marfrig Global Foods SA
 were among the only gainers, after a federal
investigation of alleged bribery of food safety officials by
Brazilian meatpackers triggered a sell-off in the sector this
    Analysts said the slump drove prices to attractive
territory, with both JBS and Marfrig able to focus on foreign
subsidiaries to sidestep potential bans on imports of Brazilian
    Most Latin American currencies weakened on profit-taking
following recent gains. The Brazilian real and the
Mexican peso weakened around 0.5 percent after firming
on Monday to the highest levels in months. 
    Indications that the U.S. Federal Reserve will increase
interest rates slowly in coming months have stoked demand for
high-yielding assets in recent weeks. 
    Key Latin American stock indexes and currencies at 1900 GMT:
 Stock indexes                                daily %   YTD %
                                               change  change
 MSCI Emerging Markets                972.02    -0.03   12.77
 MSCI LatAm                          2594.00    -1.78   12.83
 Brazil Bovespa                     63005.16     -2.9    4.61
 Mexico IPC                         48680.05     0.18    6.65
 Chile IPSA                          4664.01     0.04   12.35
 Chile IGPA                         23374.41     0.02   12.73
 Argentina MerVal                   19512.56    -1.41   15.34
 Colombia IGBC                       9967.66     0.53   -1.58
 Venezuela IBC                      37410.66    -1.16   18.00
 Currencies                                   daily %   YTD %
                                               change  change
 Brazil real                          3.0857    -0.49    5.30
 Mexico peso                         19.0900    -0.46    8.66
 Chile peso                              659     0.18    1.78
 Colombia peso                        2918.5    -0.38    2.84
 Peru sol                               3.25    -0.22    5.05
 Argentina peso (interbank)          15.5900     0.29    1.83
 Argentina peso (parallel)             16.08     0.75    4.60

 (Reporting by Bruno Federowski; Editing by Dan Grebler)
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