September 20, 2019 / 7:28 PM / a month ago

EMERGING MARKETS-Latam FX set to log first weekly loss in three as stimulus cheer fades

 (Updates with weekly loss; updates prices)
    By Sruthi Shankar
    Sept 20 (Reuters) - An index of Latin American currencies
fell on Friday, set for its first weekly loss in three, as
optimism over a fresh round of stimulus for emerging economies
was offset by doubts about progress in U.S.-China trade talks.
    MSCI's index of Latin American currencies
fell 0.4% with Brazil's real hovering at two-week lows.
The real was on course to lose nearly 2%, in part after Brazil's
central bank cut its interest rate to a record low on Wednesday
and signaled room for further easing.
    Currencies in the region have been hit by geopolitical
worries this week following attacks on Saudi Arabia's key oil
facilities, while the U.S. Federal Reserve's mixed signals about
further interest rate cuts dampened the appetite for risky
assets. 
    The Colombian peso dropped nearly a percent, leading
losses in the region ahead of Colombia's central bank meeting on
Monday. A large majority of analysts expect borrowing costs to
be on hold at 4.25% for the rest of the year.
    "With the recent newsflow having been relatively strong on
the activity side (and benign on the inflation side), we do not
expect a more dovish tone yet," Citi analysts wrote in a note. 
    On the trade front, a Chinese delegation canceled planned
visits to two U.S. farm states after the United States lifted
tariffs overnight on over 400 Chinese products. 
    China cut its new one-year benchmark lending rate for the
second month in a row and India's government announced deep cuts
in corporate taxes to revive flagging growth, both aiding risk
sentiment earlier in the day.
    The broader Latin American currencies index was set to log
losses of about 1.8% for the week, while its equities
counterpart was down 0.5% on the week. 
    The Bovespa, however, rose 0.3%, led by a 7.2% jump
in shares of petrochemical company Braskem SA after a
report that Brazilian conglomerate Odebrecht SA had hired the
investment banking unit of Lazard to sell its stake in Braskem.

    Sao Paulo banks, hit by expectations of lower interest
rates, recovered from sharp falls on Thursday.
    The Argentine peso and the Merval stock index
dropped, while bonds rose after the government submitted a debt
renegotiation framework bill to Congress on Thursday, lending
some clarity to how Argentina will respond to its latest
financial crisis. 
    Stock markets in Chile were shut for a public holiday.   

  Latin American stock indexes and currencies at 1900 GMT:
    
        Stock indexes                  Latest       Daily %
                                                     change
 MSCI Emerging Markets                    1020.23        0.36
 MSCI LatAm                               2691.74       -0.07
 Brazil Bovespa                         104680.40        0.33
 Mexico IPC                              43509.35        1.14
 Chile IPSA                                  0.00           0
 Argentina MerVal                        30007.17      -1.339
 Colombia IGBC                           12912.67        -0.4
                                                             
           Currencies                  Latest       Daily %
                                                     change
 Brazil real                               4.1583        0.09
 Mexico peso                              19.4608       -0.05
 Chile peso                                713.55        0.00
 Colombia peso                             3414.9       -0.98
 Peru sol                                   3.358       -0.12
 Argentina peso (interbank)               56.6600       -0.14
                                                   
 
 (Reporting by Sruthi Shankar in Bengaluru
Editing by Leslie Adler)
  
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