July 16, 2020 / 7:11 PM / a month ago

EMERGING MARKETS-Latam assets weaken on U.S.-China woes; Brazil's real outperforms

    * Mexican, Colombian pesos fall on weak oil
    * Latam COVID-19 cases continue to grow
    * Chile central bank holds interest rates

 (Adds background, updates prices)
    By Shreyashi Sanyal and Ambar Warrick
    July 16 (Reuters) - Most stocks and currencies in Latin
America declined on Thursday amid weak data from China and
souring Sino-U.S. relations, while Brazil's real outperformed on
positive central bank commentary.
    Data showed unexpected weakness in China's domestic
consumption, even as the world's second largest economy 
returned to growth in the second quarter after a deep slump at
the start of the year.
    China is one of the biggest importers of agricultural
products and metals from Latin America.
    Increased tensions between Washington and Beijing, over the
latter's treatment of Hong Kong, also weighed down broader
sentiment. 
    MSCI's index for Latin American stocks fell
1.3%, while most currencies also traded lower to the dollar.
    The Mexican peso fell about 0.5%, while Colombia's
peso lost 0.7% tracking a fall in oil prices.
    "Following a sharp recovery, oil prices have struggled to
firm further amid slowing energy demand growth, just as U.S.
shale production appears to stabilize and OPEC+ tapers its
historic cuts," analysts at TD Securities wrote in a note.
    "Notwithstanding, decomposing market expectations, we find
that energy markets have already discounted easing supply-side
support. And, we continue to expect significant deficits on the
horizon nonetheless."
    Energy sector stocks, such as Brazil's Petrobras,
 also lagged for the day.
    Brazil's real rose about 1.3% after Central Bank
President Roberto Campos Neto expressed some optimism over the
economy and measures taken to shield it from the coronavirus.
    Still, he said that a post COVID-19 recovery was likely to
be slow.
    In what is likely to benefit the real, Brazilian meat
companies are poised to increase production and exports this
year, according to ABPA, a lobby group representing pork and
chicken suppliers.
    Cases continued to surge in South America, with Mexico
reporting 6,149 new confirmed coronavirus infections on
Wednesday and 579 additional fatalities, bringing the total in
the country to 317,635 cases and 36,906 deaths.
    Agricultural exports to China have also been impacted as
Argentina suspended exports to China from eight meatpacking
plants and the Chinese government asked Brazil to suspend
exports from two meat plants over coronavirus concerns.
    
    Chilean markets were shut on Thursday due to a public
holiday. On Wednesday, Chile's central bank kept its benchmark
interest rate steady at 0.5% as per market expectations.
  
    
    Key Latin American stock indexes and currencies:
    
    Stock indexes             Latest    Daily % change
 MSCI Emerging Markets         1046.08             -1.9
                                        
 MSCI LatAm                    1981.57            -1.28
                                        
 Brazil Bovespa              100535.68            -1.23
                                        
 Mexico IPC                   36392.45            -0.54
                                        
 Argentina MerVal             45408.93            0.639
                                        
 Colombia COLCAP               1147.84             0.26
                                        
                                                       
       Currencies             Latest    Daily % change
 Brazil real                    5.3145             1.29
                                        
 Mexico peso                   22.4385            -0.52
                                        
 Colombia peso                  3640.4            -0.71
 Peru sol                       3.5038            -0.29
                                        
 Argentina peso                71.4100            -0.07
 (interbank)                            
                                        
 
    

 (Reporting by Shreyashi Sanyal in Bengaluru
Editing by Alistair Bell and Marguerita Choy)
  
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