September 3, 2018 / 10:06 PM / a year ago

EMERGING MARKETS-Brazil real slumps on election, global selloff; Argentine peso tumbles

 (Updates figures, adds details from markets)
    By Bruno Federowski
    BRASILIA, Sept 3 (Reuters) - The Brazilian real slumped on
Monday as mounting concerns over this year's presidential
election added to global risk aversion, while the Argentine peso
extended a recent sell-off that also spread into stock markets
in Latin America.
    Emerging market currencies in general have suffered in
recent weeks due to escalating trade tensions surrounding the
United States that investors believe could damage global growth.
    U.S. President Donald Trump said on Saturday there was no
need to keep Canada in the North American Free Trade Agreement
and warned Congress not to meddle with the talks to revamp NAFTA
or he would terminate the trilateral pact.
    The real weakened almost 2 percent, nearing its
lowest level in 2-1/2 years, also weighed down by anxiety over
October's presidential election.
    "There's a lot of uncertainty, both concerning the trade war
and the outcome of the elections. And liquidity is thin due to
the U.S. (Labor Day) holiday," a trader at a São Paulo-based
brokerage said.
    Other Latin American assets were also down, with Mexico's
 and Chile's currencies slipping nearly 0.5 percent
and almost 0.3 percent, respectively.
    However, the Argentine peso led losses, slipping
by more than 3 percent, and deepening a recent rout driven by
growing bets against President Mauricio Macri's ability to rein
in a fiscal deficit and curb inflation.
    The move came even after the government unveiled a new
export tax and spending cuts aimed at fighting the currency
crisis while it continues to negotiate additional funding with
the International Monetary Fund (IMF).
    The Argentine peso is down over 50 percent this year, making
it one of the world's worst-performing currencies.
    Argentina's stock market slid more than 1.6 percent,
while other indices in the region also came under pressure.
    Key Latin American stock indexes and currencies at 2153 GMT:
 Stock indexes                               daily %    YTD %
                                              change   change
 MSCI Emerging Markets              1055.96    -0.18    -8.85
 MSCI LatAm                         2463.79        1   -12.88
 Brazil Bovespa                    76192.73    -0.63    -0.27
 Mexico IPC                        49488.85    -0.12     0.27
 Chile IPSA                         5236.34    -0.65    -5.90
 Argentina MerVal                  28807.29    -1.66    -4.19
 Colombia IGBC                     12220.85    -0.28     7.48
 Currencies                                  daily %    YTD %
                                              change   change
 Brazil real                         4.1520    -1.95   -20.20
 Mexico peso                        19.1897    -0.57     2.65
 Chile peso                          684.50    -0.26   -10.20
 Peru sol                             3.301    -0.24    -1.94
 Argentina peso (interbank)         38.0000    -3.14   -51.05
 (Reporting by Bruno Federowski
Additional reporting by Claudia Violante in São Paulo; Editing
by Dan Grebler and Jonathan Oatis)
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