August 16, 2017 / 5:06 PM / a year ago

EMERGING MARKETS-Brazil markets seesaw as S&P affirms rating; Mexico peso firms

    By Bruno Federowski
    SAO PAULO, Aug 16 (Reuters) - Brazilian markets seesawed on
Wednesday as credit ratings agency Standard & Poor's spared the
country from a downgrade after the government loosened budget
targets for years to come.
    Brazil on Tuesday widened its primary budget deficit goals
through 2020 after lawmakers repeatedly refused to raise taxes
needed to boost recession-hit revenues.
    The move was widely expected in financial markets, but had
stoked some concern of potential action by ratings agencies.
Still, S&P reaffirmed the country's "BB" rating and stripped its
CreditWatch status, brushing away the possibility of a downgrade
in the near term.
    "Any immediate move by S&P would have wreaked havoc on
Brazilian markets," said Fernando Pavani, a partner at foreign
exchange brokerage BeeCâmbio.
    The agency, however, revised Brazil's credit outlook to
"negative," indicating a more-than-one-third possibility of a
downgrade in the next six to nine months.
    The Brazilian real strengthened 0.2 percent, while
the benchmark Bovespa stock index was flat.
    Preferred shares in petrochemical company Braskem SA
 rose as much as 4.5 percent after it reported a 316
percent jump in second-quarter net income.
    Health firm Qualicorp SA fell for a second
straight day, and was the biggest decliner on the Bovespa. The
two-day slump was triggered by a downgrade from analysts at Itaú
BBA, with traders booking profits on the stock's recent rally
following in-line results.
    Most other Latin American currencies treaded water as
traders awaited further hints over the likelihood of an
additional U.S. interest rate increase this year.
    A stretch of mixed economic figures has cast doubt over the
U.S. Federal Reserve's plans for interest rate hikes, fueling
demand for emerging market currencies. 
    The Chilean peso was up 0.5 percent, tracking
copper prices higher. The Mexican peso firmed 0.4
percent as officials began negotiations over the North American
Free Trade Agreement.
    Key Latin American stock indexes and currencies at 1640 GMT:
 Stock indexes                    Latest         Daily     YTD
                                                   pct     pct
                                                change  change
 MSCI Emerging Markets               1,060.47     0.76   22.06
 MSCI LatAm                          2,796.79     0.85   18.48
 Brazil Bovespa                     68,356.19        0   13.50
 Mexico S&P/BVM IPC                 51,033.79     -0.6   11.81
 Chile IPSA                          5,103.77     0.79   22.94
 Chile IGPA                         25,464.34     0.75   22.81
 Argentina MerVal                   22,723.83     0.09   34.32
 Colombia IGBC                      10,841.11     1.18    7.04
 Venezuela IBC                     186,255.80     0.46  487.46
 Currencies                            Latest    Daily     YTD
                                                   pct     pct
                                                change  change
 Brazil real                           3.1658     0.20    2.63
 Mexico peso                          17.7325     0.44   16.98
 Chile peso                               645     0.47    3.98
 Colombia peso                       2,965.72    -0.12    1.21
 Peru sol                               3.242     0.09    5.31
 Argentina peso (interbank)           17.1275    -0.28   -7.31
 Argentina peso (parallel)              18.17    -0.11   -7.43
 (Reporting by Bruno Federowski)
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