December 2, 2019 / 7:57 PM / 7 days ago

EMERGING MARKETS-Latam FX firm as dollar drops; U.S. tariffs pressure stocks

    * Trump to restore tariffs on metal imports from Brazil,
Argentina
    * Latam FX gain as dollar drops after weak U.S.
manufacturing data
    * Brazil stocks rise after strong manufacturing data
    * Chilean peso firms as central bank intervention kicks in

    By Susan Mathew
    Dec 2 (Reuters) - A dollar weakened by poor U.S. economic
data helped Latin American currencies brush off the
re-imposition of U.S. tariffs on steel and aluminum imports from
Brazil and Argentina on Monday.
    Brazil's real firmed 0.4% with a spot auction by the central
bank supporting the currency, while the Argentine and
Mexican pesos were flat against a dollar that slid on
weak U.S. manufacturing data.      
    Surprising officials in the two South American countries,
U.S. President Donald Trump said on Monday he would restore
tariffs on U.S. steel and aluminum imports, accusing them of
devaluing their currencies to the detriment of U.S.
farmers.
    Brazil's benchmark Bovespa index rose as mine Vale
 advanced on higher iron ore prices, and as retailer
Via Varejo posted strong Black Friday sales, but
other Latam equity markets slipped.
    Argentine stocks fell almost 3%, snapping three days
of gains, and led losses in the region. Aluminum producer Alua
Aluminio Argentino was the worst performer on the
index, down more than 10%.
    "The main thing is that trade tensions aren't going away,"
said Win Thin, global head of emerging market currency strategy
at Brown Brothers Harriman in New York.
    "Markets had been pretty complacent about a U.S.-China trade
deal and the U.S.-Mexico-Canada trade deal. There was a
lessening in tensions, and this goes against that." 
    But since no official announcement has been made, markets
will await more clarity and justification, he said.
    The real eased 0.4% immediately after the tweet, but
reversed course after the central bank sold 9,600 reverse
currency swap contracts and $480 million in spot currency.

    Data showing Brazil's manufacturing growth in November also
supported sentiment as it pointed to a steady recovery in Latin
America's largest economy.
    Similar data in Mexico, however, showed November
manufacturing activity slowed to its most sluggish pace in over
8-1/2 years on the back of economic uncertainty, declining
business confidence and weak demand.
    The Chilean peso firmed as the central bank's $20
billion currency intervention program kicked in. The bank had
outlined the plan last week after the peso hit a record low
against the dollar.
    The peso was also supported by higher prices for copper,
Chile's largest export, as markets perceived increased demand
for the metal following the stronger-than-expected Chinese data.

    
    Key Latin American stock indexes and currencies at 19:30
GMT:
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets         1039.88     -0.02
                                        
 MSCI LatAm                    2667.01      0.38
                                        
 Brazil Bovespa              109056.54      0.76
                                        
 Mexico IPC                   42679.10     -0.33
                                        
 Chile IPSA                    4499.70     -0.86
                                        
 Argentina MerVal             33526.09    -2.824
                                        
 Colombia Colcap               1597.75     -0.88
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    4.2197      0.45
                                        
 Mexico peso                   19.5750     -0.07
                                        
 Chile peso                      803.2      0.07
                                        
 Colombia peso                    3503      0.36
 Peru sol                        3.391      0.41
                                        
 Argentina peso                59.9600     -0.03
 (interbank)                            
                                        
 
 (Reporting by Ambar Warrick and Susan Mathew in Bengaluru;
Editing by Richard Chang)
  
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