November 30, 2018 / 9:51 PM / in 14 days

EMERGING MARKETS-Latam currencies slip, all eyes on Trump-Xi meeting

 (Recasts throughout; updates prices)
    By Susan Mathew
    Nov 30 (Reuters) - Most Latin American currencies weakened
on Friday, pressured by a strong dollar as investors cautiously
await the outcome of a crucial meeting between the leaders of
the United States and China that could decide the direction of
an ongoing trade war between the two countries. 
    The Mexican peso, a weather vane for trade sentiment,
declined 0.9 percent, taking the MSCI index of Latin American
currencies down 0.6 percent. The index posted a
loss for the month of November of nearly 2 percent, snapping two
months of gains.
    "Market investors err on the side of caution by the closing
of the month and in anticipation of several meetings that will
be held during the G20 Summit in Argentina this weekend,"
analysts at Banorte said in a note.  "Investors are watchful,
mainly on the meeting between U.S. President Donald Trump and
(Chinese President) Xi Jinping which may define the immediate
future of the trade war between these two nations." 
    The bitter tit-for-tat dispute between the two countries has
dampened investor sentiment globally in recent months, and
analysts are increasingly skeptical of a positive outcome from
the meeting as both parties have kept up tough rhetoric. 
    "The best-case scenario would be some sort of ceasefire,"
said Morten Lund, an analyst with Nordea Markets. 
    In Mexico, President-elect Andres Manuel Lopez Obrador's
inaugural speech when he takes office on Saturday is also being
awaited for any policy direction.
    The peso and stocks have been beaten down in recent months
with investor confidence shaken by uncertainties surrounding the
policy tact of the incoming government.
    The nervousness was precipitated by Lopez Obrador's
cancellation of a partially built airport in Mexico City in
which billions had already been invested. 
    Mexico's IPC stock index was down 0.5 percent for the
day, bringing its decline for November to 5 percent, in its
fourth straight losing month.
    Brazil's real fell 0.4 percent on the day, and
clocked a monthly loss after two months of gains when optimism
regarding the election of Jair Bolsonaro as the country's new
president had buoyed markets.
    Stocks on Sao Paulo's Bovespa index rose for a
fourth straight session and touched yet another high, a day
after hitting a record high as well.
    Argentine markets were closed as the country hosts the Group
of 20 summit that began on Friday. The Argentine peso
posted monthly losses, while stocks gained on the month.
    The Colombian peso climbed 0.3 percent, but stocks
 posted their worst day since last April, down more than
3 percent. 
    The country's government on Wednesday said it has modified
its tax reform proposal, nearly halving its original revenue
target, and forcing it to freeze spending to meet fiscal goals
as it seeks to satisfy credit rating agencies.
    The bill could have a smaller inflationary impact than
originally anticipated, analysts at Morgan Stanley said in a
note. But although it aims to encourage investment, "it does not
address some of the more long-term fiscal concerns," they
warned.
    
    Key Latin American stock indexes and currencies at 2130 GMT:
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets          994.72     -0.33    -14.13
                                                  
 MSCI LatAm                    2599.59     -1.13     -8.08
                                                  
 Brazil Bovespa               89504.03     -0.23     17.15
                                                  
 Mexico IPC                   41720.68     -0.46    -15.47
                                                  
 Chile IPSA                    5111.88     -0.86     -0.86
                                                  
 Colombia IGBC                11604.75     -3.25      2.06
                                                  
                                                          
 Currencies                              daily %     YTD %
                                          change    change
                                Latest            
 Brazil real                    3.8615     -0.17    -14.20
                                                  
 Mexico peso                   20.4060     -0.86     -3.46
                                                  
 Chile peso                      672.5     -0.49     -8.60
                                                  
 Colombia peso                    3231      0.17     -7.71
 Peru sol                        3.382     -0.03     -4.29
                                                  
 

 (Additional reporting by Sruthi Shankar in Bengaluru; editing
by Jonathan Oatis and Leslie Adler)
  
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