November 2, 2018 / 4:21 PM / 13 days ago

EMERGING MARKETS-Mexican peso firms, global risk-on mood supports Argentine stocks

    By Susan Mathew
    Nov 2 (Reuters) - The Mexican peso firmed on Friday and the
Argentine peso rose for a fourth straight session against a
steady dollar, while stocks in Buenos Aires gained as signs of a
possible resolution of the Sino-U.S. trade war boosted risk
appetite.
    Reports of U.S. President Donald Trump seeking a trade
agreement with Chinese President Xi Jinping boosted stocks and
currencies globally but hurt the dollar. Strong U.S. jobs data
helped the greenback cut losses.
    However, a senior Trump administration official dismissed as
untrue a media report that Trump was readying a possible trade
deal with China, a CNBC reporter said in a post on Twitter.
"There is a long way to go," on negotiations, the unnamed
official told CNBC's Eamon Javers, according to his tweet.

    The U.S. currency usually benefits from an escalating trade
war as spooked investors flee to the safe-haven bet.
   
    Financial markets in Brazil and Chile and stock markets in
Mexico were closed for local holidays.
    The Mexican peso rose by as much as 1.3 percent
before trading 0.5 percent firmer.
    "It's overall market sentiment ... News that the chances for
a trade deal between the U.S. and China are good triggered a
risk-on mood across emerging markets," said Esther Reichelt, an
FX strategist at Commerzbank.
    But it has been a tough week for the Mexican peso which is
on pace to log a weekly loss of more than 3 percent - its worst
weekly decline since early May - gripped by political concerns.
    It lost 3.5 percent on Monday after citizens voted to scrap
the completion of a partly-built airport in Mexico City, and
continued losses after the incoming president canceled the
project in which billions had already been invested.
    This prompted a credit rating downgrade warning by Fitch on
concerns over the new government's policies, which caused a
further rout in the peso. But the sell-off will be temporary as
the cancellation should not have much actual macro impact,
analysts at Citigroup said.
    The Argentine peso climbed 0.1 percent and was on
track to log a weekly gain of 3.7 percent. The Merval stock
index rose as much as 1.7 percent to its highest in four
weeks with gains being broad-based, before retreating to trade
half a percent higher.
    The Colombian peso strengthened for a second day
after eight consecutive sessions of weakening, while the
country's stock market fell 0.2 percent, reversing earlier
gains.

    Key Latin American stock indexes and currencies at 1551 GMT:
 Stock indexes                            Daily %       YTD %
                                           change      change
                              Latest               
 MSCI Emerging Markets           998.76      2.81      -16.14
                                                   
 MSCI LatAm                     2724.90      0.23       -3.88
                                                   
 Argentina MerVal              31453.02      0.46        4.61
                                                   
 Colombia IGBC                 12150.58     -0.22        6.86
                                                   
                                                             
 Currencies                               Daily %       YTD %
                                           change      change
                                 Latest            
 Mexico peso                    20.0404      0.54       -1.70
                                                   
 Colombia peso                  3173.48      0.53       -6.03
 Peru sol                         3.371      0.00       -3.98
                                                   
 Argentina peso (interbank)     35.6300      0.14      -47.80
                                                   
 
 (Reporting by Susan Mathew in Bengaluru
Editing by James Dalgleish)
  
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