May 17, 2017 / 11:34 PM / a year ago

EMERGING MARKETS-LatAm currencies weaken as Trump woes spark risk-aversion

 (Updates prices)
    By Bruno Federowski
    SAO PAULO, May 17 (Reuters) - Latin American markets and
currencies weakened on Wednesday as speculation U.S. President
Donald Trump could face the threat of impeachment triggered
worldwide profit-taking on riskier assets.
    The Brazilian real slipped 1.23 percent, while the
Mexican peso fell 0.71 percent. Both currencies had
strengthened in the last six trading days.
    News reports emerged on Tuesday that Trump had asked
then-Federal Bureau of Investigation Director James Comey to end
the agency's investigation into ties between former White House
national security adviser Michael Flynn and Russia.
    The reports fueled questions over whether Trump could be
charged with obstruction of justice, potentially opening the
door for an early exit from office.
    Uncertainty over his future drove investors away from
higher-risk assets, while also fostering doubt over the
implementation of his fiscal expansion pledges, traders said.
    Stock markets also fell, with MSCI's emerging markets equity
index down 0.63 percent. MSCI's Latin American stock
index fell 1.71 percent, following a 6 percent
rally in the last six sessions.
    All of Latin American benchmark stock indexes were down,
with Brazil's Bovespa index the worst performer, dropping 1.67
    Shares of banking giant Itau Unibanco lost 2.04
percent, while those of fellow bank Bradesco fell
1.97 percent. Iron ore producer Vale also suffered,
with its shares down 1.93 percent. 
    Mexico's IPC stock index was not immune from the pain,
losing 1.44 percent during Wednesday's session. 
    Shares of bottler and retailer Fomento Economico Mexicano
(Femsa) lost 1.93 percent after Coca-Cola Femsa, a
joint venture with Coca-Cola Co, ditched plans to acquire
certain distribution territories in the United States.
    Shares of dairy producer Grupo Lala fell 3.90 percent on
Wednesday, the same day the Wall Street Journal reported the
company was the lead bidder for Danone's Stonyfield Farm, a U.S.
yogurt maker.     
    Key Latin American stock indexes and currencies at 2307 GMT:
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets           1008.63     -0.63     16.97
 MSCI LatAm                      2714.34     -1.71     15.97
 Brazil Bovespa                 67540.25     -1.67     12.14
 Mexico IPC                     48747.95     -1.44      6.80
 Chile IPSA                      4853.49     -0.45     16.91
 Chile IGPA                     24357.55     -0.37     17.48
 Argentina MerVal               21674.24     -0.72     28.11
 Colombia IGBC                  10721.89     -0.97      5.86
 Venezuela IBC                  65376.60      1.49    106.20
 Currencies                                daily %     YTD %
                                            change    change
 Brazil real                      3.1337     -1.23      3.69
 Mexico peso                     18.7825     -0.71     10.44

 (Reporting by Bruno Federowski; Editing by Andrea Ricci and
Cynthia Osterman)
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