October 31, 2019 / 8:16 PM / 8 months ago

EMERGING MARKETS-Latam markets weaken on U.S.-China trade concerns

 (Updates prices)
    By Sruthi Shankar
    Oct 31 (Reuters) - Most Latin American currencies and stocks
weakened on Thursday, with renewed doubts over a U.S.-China
trade deal knocking Brazil's real off 11-week highs hit after
the central bank signaled that future interest rate cuts may be
less aggressive.
    The real touched its highest level since mid-August
earlier in the session, supported by a less-dovish sounding
central bank, which cut the benchmark interest rate to an
all-time low of 5.00% as expected on Wednesday.
    However, the currency reversed course to drop 0.7% after
Bloomberg reported that Chinese officials have doubts about
reaching a comprehensive long-term trade deal with Washington
and U.S. President Donald Trump.
    The weakness in emerging markets came even as the dollar
fell broadly against a basket of major currencies after the U.S.
Federal Reserve cut interest rates as expected on Wednesday and
signaled additional trims are unlikely.
    Market participants remain concerned about a slowdown in the
U.S. economy as the trade war between the United States and
China continues, which could force the Fed's hand. Investors
will be closely watching the U.S. payrolls data on Friday for
more signs on the health of the economy.
    "Although the Fed appears to be on hold for the moment, we
would note that risks are still skewed to the downside," Mark
Haefele, chief investment officer at UBS Global Wealth
Management, wrote in a client note.
    "If growth slows in line with our forecasts, the Fed could
be forced to implement additional rate cuts."
    Aside from trade worries, Mexico's peso was hit by 
data from Wednesday showing the economy crawled forward in the
third quarter from the previous three-month period, falling
short of forecasts.
    Colombia's peso edged higher as its central bank held
the benchmark interest rate steady at 4.25%, as expected by the
market. The board is expected to hold the rate until sometime
next year.
    In stocks, Sao Paulo-listed shares fell more than
1%, in line with a move lower in U.S. markets.
    Brazil's second-largest private-sector lender, Banco
Bradesco, was the biggest weight on the main index.
It met estimates on quarterly net income, but reported a rise in
loan arrears and loan loss provisions. 
    Airline Gol slid 5% after reporting a quarterly
loss hit by problems affecting its Boeing 737 planes. 

    Key Latin American stock indexes and currencies at 1940 GMT:
        Stock indexes                 Latest       Daily %
 MSCI Emerging Markets                  1040.56         -0.09
 MSCI LatAm                             2775.70         -0.91
 Brazil Bovespa                       107212.06          -1.1
 Mexico IPC                            43411.98         -0.75
 Chile IPSA                                   -             -
 Argentina MerVal                      34971.97         3.196
 Colombia IGBC                         13244.17         -0.14
           Currencies                 Latest       Daily %
 Brazil real                             4.0128         -0.68
 Mexico peso                            19.2312         -0.78
 Chile peso                                   -             -
 Colombia peso                             3377          0.31
 Peru sol                                 3.344          0.00
 Argentina peso (interbank)             59.6700          0.07
 (Reporting by Sruthi Shankar and Susan Mathew in Bengaluru;
Editing by Chizu Nomiyama)
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