December 7, 2017 / 9:10 PM / a year ago

EMERGING MARKETS-Brazil markets slump as pension reform odds fade

 (Updates prices)
    By Bruno Federowski
    SAO PAULO, Dec 7 (Reuters) - Brazilian markets fell on
Thursday after President Michel Temer's administration failed to
gather enough support from lawmakers to put a pension overhaul
plan to a vote.
    A senior lawmaker said on Wednesday that the government's
coalition expected to have enough votes later that day to pass
the bill, which investors see as crucial to curbing public debt.
    But a failure to do so led policymakers to put off a
decision, originally planned for Wednesday, to formally schedule
the vote, suggesting that the administration might have
overestimated its clout in Congress.
    "The market is anticipating that the pension reform will not
be voted this year," said Coinvalores brokerage head of strategy
Paulo Nepomuceno.
    Delaying the vote on the unpopular measure to 2018 would put
it close to next year's elections, a move most investors see as
reducing its likelihood of approval.
    The Brazilian real weakened 0.14 percent, while the
benchmark Bovespa index fell more than 1 percent.
    Other Latin American currencies mostly weakened due to
expectations that the United States will push through a tax
    U.S. Senate Republicans agreed to talks with the House of
Representatives on sweeping tax legislation on Wednesday, amid
early signs that lawmakers could bridge their differences and
agree on a final bill ahead of a self-imposed Dec. 22 deadline.

    The tax plan could boost economic growth and inflation,
prompting the Federal Reserve to raise interest rates at a
faster-than-expected pace in coming months. Higher U.S. rates
tend to drain funds away from emerging markets.
    Key Latin American stock indexes and currencies at 2101 GMT:
 Stock indexes                           daily %     YTD %
                             Latest       change    change
 MSCI Emerging Markets         1100.26     -0.08     27.71
 MSCI LatAm                    2696.37     -1.59     17.06
 Brazil Bovespa               72487.46     -1.07     20.36
 Mexico IPC                   46981.22      0.02      2.93
 Chile IPSA                    4887.16     -0.02     17.72
 Chile IGPA                   24616.07      0.01     18.72
 Argentina MerVal             26841.50       1.4     58.66
 Colombia IGBC                10901.02      0.53      7.63
 Venezuela IBC                 1335.06     -1.43    -95.79
 Currencies                              daily %     YTD %
                                          change    change
 Brazil real                    3.2901     -0.14     -1.24
 Mexico peso                   18.9670     -0.52      9.37
 Chile peso                      655.6     -0.34      2.30
 Colombia peso                  3010.2     -0.14     -0.29
 Peru sol                        3.235     -0.03      5.53
 Argentina peso                17.2750     -0.12     -8.10
 Argentina peso                  17.83      0.67     -5.66
 (Reporting by Bruno Federowski; Editing by Lisa Von Ahn and
Meredith Mazzilli)
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