November 29, 2017 / 10:31 PM / a year ago

EMERGING MARKETS-Brazil pension reform worries weigh on stocks, currency

 (Updates with final prices, details from Mexico)
    By Bruno Federowski
    SAO PAULO, Nov 29 (Reuters) - Brazil's stocks and currency
fell on Wednesday, extending a recent trend of heightened
volatility as traders seek new clues about the likelihood that
Congress will approve a plan to streamline the social security
    Chief of Staff Eliseu Padilha said Brazil's government is
unwilling to further water down the controversial bill, after
repeatedly doing so in order to garner lawmaker support.

    His remarks worried traders who feared Brazilian President
Michel Temer's administration will not manage to get enough
votes with the measure, which they see as critical to boosting
long-term economic growth, as it stands.
    "The market read this as a sign that the government has no
resources left to convince lawmakers to vote for the plan," said
a trader at a São Paulo-based brokerage.
    The current version of the pension reform plan would
generate fiscal savings of around 60 percent of the government's
original proposal.
    Brazil's benchmark Bovespa stock index fell nearly 2
percent, leading losses among equity markets in Latin America on
declines in blue-chips such as lenders Itaú Unibanco Holding SA
, Bradesco SA and state-controlled oil
company Petróleo Brasileiro SA.
    The Brazilian real dropped 1 percent, while the
Chilean, Colombian and Mexican pesos
also fell. Mexico's stock index rose 0.83 percent after
four consecutive days of decline took it to eight month lows.
    Strong U.S. third-quarter growth data and signs of progress
in U.S. Republicans' efforts to get a tax bill passed fueled
expectations of inflationary pressure in the United States which
could force the Federal Reserve to hike interest rates.
    Higher rates could dampen demand for emerging market
currencies, which typically lure foreign investors with high
    Key Latin American stock indexes and currencies at 2220 GMT:
 Stock indexes                    Latest         Daily     YTD
                                                   pct     pct
                                                change  change
 MSCI Emerging Markets               1,141.38    -0.45   32.37
 MSCI LatAm                          2,780.93    -0.92   18.81
 Brazil Bovespa                     72,700.45    -1.94   20.71
 Mexico S&P/BVM IPC                 47,622.93     0.83    4.34
 Chile IPSA                          5,012.60    -0.96   20.75
 Chile IGPA                         25,216.59    -0.91   21.62
 Argentina MerVal                   26,902.88    -0.03   59.02
 Colombia IGBC                      10,848.46     0.39    7.11
 Venezuela IBC                       1,167.21    37.07  -96.32
 Currencies                            Latest    Daily     YTD
                                                   pct     pct
                                                change  change
 Brazil real                            3.246    -1.04    0.10
 Mexico peso                          18.5650    -0.12   11.74
 Chile peso                             643.5    -0.34    4.23
 Colombia peso                       3,006.00    -0.46   -0.15
 Peru sol                               3.234    -0.03    5.57
 Argentina peso (interbank)            17.425    -0.26   -8.90
 Argentina peso (parallel)              18.07     0.11   -6.92
 (Reporting by Bruno Federowski, editing by G Crosse)
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