September 13, 2019 / 7:58 PM / 7 days ago

EMERGING MARKETS-Brazil stocks drag Latam lower; focus turns to U.S. Fed

 (Updates prices, analyst comment)
    By Ambar Warrick
    Sept 13 (Reuters) - Brazilian stocks edged lower on Friday
after several strong sessions as investors braced for key
monetary policy decisions from the U.S. Federal Reserve,
although most markets were set for weekly gains on easing
U.S.-China trade tensions.
    Emerging market assets have benefited this week from
increased risk appetite after Washington and Beijing officials
made concessions on retaliatory tariffs, while the European
Central Bank cut interest rates and promised more stimulus.
    However, the mood soured somewhat on Friday as investors
scaled back expectations for aggressive policy easing by the
U.S. Federal Reserve next week following better-than-expected
economic data.
   "The market has taken back a lot of their easing
expectations, and I think that's overall negative for EM," said
Win Thin, global head of emerging market currency strategy at
Brown Brothers Harriman.
    MSCI's index of Latin American stocks
declined 1% but was set to add about 0.3% for the week, its
third straight week of gains.
    Brazil's Sao Paolo index fell 1%, with consumer
discretionary stocks weighing the most as investors locked in
profits after gaining in the past six of eight sessions. The
index was set to gain 0.4% this week, hovering just below
record-high levels.
    Brazil's central bank is widely expected to cut its
record-low rates by 50 basis points next week in order to shore
up Latin America's largest economy.
    "The (Brazilian) economy is still very sluggish compared to
where it should be and inflation is low, so I think the central
bank is under pressure to ease," Thin added, noting that a total
1% cut by the bank may be likely this year, which would hurt the
real.
    The Brazilian real fell 0.7%, and was set for its
worst week since late-August.
    Mexican stocks rose about 0.3%. President Andres
Manuel Lopez Obrador said on Friday that state oil company Pemex
will consolidate its finances and "has a bright future", a day
after the debt-ridden state oil firm carried out the biggest
refinancing operation in its history.
    The Mexican peso fell 0.1%, and was set to gain 0.5%
this week.
    Chilean stocks rose 0.6% and were set for an
eighth straight gaining session, recovering from a more than
two-year low touched late-August.
    The Chilean peso rose for a second straight day,
tracking a recovery in the prices of copper, the country's top
export.
    Argentine equities rose about 4% and were set to
gain more than 9% for the week as lower stock valuations
attracted bargain buying after a crash in August. 
    

Latin American stock indexes and currencies at 1926 GMT
    
 Stock indexes                               Daily % change
                             Latest     
 MSCI Emerging Markets         1026.63                 0.42
                                        
 MSCI LatAm                    2689.25                -1.03
                                        
 Brazil Bovespa              103336.41                -0.99
                                        
 Mexico IPC                   42800.66                 0.31
                                        
 Chile IPSA                    5005.40                 0.62
                                        
 Argentina MerVal             30236.28                3.852
                                        
 Colombia IGBC                12792.69                 -0.8
                                        
                                                           
 Currencies                                  Daily % change
                                        
                                Latest  
 Brazil real                    4.0881                -0.71
                                        
 Mexico peso                   19.4418                -0.06
                                        
 Chile peso                     707.85                 0.16
                                        
 Colombia peso                 3361.45                 0.05
 Peru sol                        3.321                 0.09
                                        
 Argentina peso                56.0900                 0.05
 (interbank)                            
                                        
 

 (Reporting by Ambar Warrick in Bengaluru; Editing by Cynthia
Osterman)
  
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