November 14, 2017 / 4:05 PM / a year ago

EMERGING MARKETS-Brazil stocks down as lower earnings hit Petrobras shares

    By Bruno Federowski
    SAO PAULO, Nov 14 (Reuters) - Brazilian stocks fell on
Tuesday, weighed down by a slump in shares of state-controlled
oil company Petróleo Brasileiro SA in the wake of
smaller-then-expected quarterly profits.
    Common shares in Petrobras dropped 5.7 percent to
16.52 reais, the biggest daily decline in six months. Preferred
shares were off 5.1 percent.
    Third-quarter profit of Petrobras, as the company is known,
missed estimates of a big rise, hit by weak margins in refining
and nonrecurring charges.
    In a client note, UBS analysts led by Luiz Carvalho said the
company may find it hard to continue cutting investment to
reduce debt. 
    "We believe the company is getting closer to a recurrent
operational level and further improvements might be harder to
achieve from now on, making divestments even more crucial for
the deleveraging process," they wrote.
    In a presentation the day after posting results, Petrobras
nearly doubled its fundraising forecast for 2017 but trimmed its
outlook for divestments.
    At the other end of the spectrum, JBS SA jumped
about 5 percent to a one-month high after it recorded strong
third-quarter operating margins and lower debt levels.
    "More than results per se, which were strong and show just
how a higher sense of urgency can help to restore value, the
investment case is now, more than ever, a story of rebuilding
investor confidence from scratch," analysts at Banco BTG Pactual
SA wrote in a report.
    The benchmark Bovespa stock index dipped 0.6
percent, while the Brazilian real slipped 0.1 percent.
Most Latin American currencies seesawed as investors awaited
further clues over plans for U.S. tax reform.
    The Mexican peso was down 0.1 percent ahead of a
new round of negotiations over a trade pact between the United
States, Mexico and Canada later this week.
    Key Latin American stock indexes and currencies at 1540 GMT:
 Stock indexes                              daily %   YTD %
                                             change  change
 MSCI Emerging Markets            1120.01     -0.29   30.27
 MSCI LatAm                       2714.53     -0.88      17
 Brazil Bovespa                  71888.63     -0.81   19.36
 Mexico S&P/BVM IPC              47770.53     -0.48    4.66
 Chile IPSA                       5357.59      0.39   29.06
 Chile IGPA                      26985.04      0.32   30.15
 Argentina MerVal                26157.65     -2.09   54.62
 Colombia IGBC                   10676.18     -0.79    5.41
 Venezuela IBC                     662.34      1.19  -97.91
 Currencies                                 daily %   YTD %
                                             change  change
 Brazil real                       3.3009     -0.11   -1.57
 Mexico peso                      19.1500     -0.12    8.32
 Chile peso                         631.5     -0.40    6.21
 Colombia peso                    3020.25     -0.47   -0.62
 Peru sol                           3.243     -0.06    5.27
 Argentina peso (interbank)       17.4500      0.32   -9.03
 Argentina peso (parallel)          17.99      0.50   -6.50
 (Reporting by Bruno Federowski; Editing by Jeffrey Benkoe)
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