October 14, 2019 / 2:53 PM / a month ago

EMERGING MARKETS-Latam currencies weaken as trade optimism fades

    By Susan Mathew
    Oct 14 (Reuters) - Most Latin American currencies weakened
on Monday as initial euphoria over a partial trade agreement
between the United States and China were tempered by a report
that Beijing wants more talks before it signs the deal.
    MSCI's index of Latam currencies slipped
0.1%, with Brazil's real softening 0.4% as waning risk
appetite supported the dollar. Worries stemmed also from dismal
trade data from China - one of the main destinations for
commodity exports from Latin America.
    Analysts had warned that while the "phase one" deal struck
late on Friday heads off more tariffs that were due to take
effect on Chinese goods from Tuesday, it did not reverse or
reduce existing tariffs or remove the threat of December
tariffs.
    On Monday Bloomberg reported that China wants more talks to
hammer out the details, including scrapping the planned tariffs
in December, before it signs the partial deal.
    "That the talks shifted towards a first phase, covering
narrow issues around trade only reveals how difficult the deeper
issues around intellectual property, technology transfer and
industrial strategy will be to resolve," wrote Neil Shearing,
group chief economist at Capital Economics.
    "In the absence of an actual text it is difficult to judge
the significance of all this," he said, adding that there is no
obvious path to a "phase two" deal covering these broader
concerns.
    Chile's peso fell marginally, breaking a
three-session winning streak, with additional pressure coming
from declining prices of its main export, copper.
    Bucking the trend, Mexico's peso rose 0.3% and looked
set to extend gains to a fourth day. 
    Mexico's president on Sunday said he would send a letter to
U.S. congressional Democrats, vowing to implement a recent labor
law to assuage concerns over worker rights and speed
ratification of a trade agreement with the United States and
Canada.
    Regional equities were steady, moving in
line with Wall Street.
    In Chile and Brazil, stocks reversed early
losses and were trading about 0.1% higher. 
    A 1.8% fall in miner Vale after it reported a 17%
decline in iron ore production from a year ago, capped gains on
Brazil's main index.
    Markets in Argentina and Colombia were closed for public
holidays.
    
    Key Latin American stock indexes and currencies at 1418 GMT:
   Stock indexes            Latest    Daily %
                                      change
 MSCI Emerging Markets       1017.53     0.59
                                      
 MSCI LatAm                  2701.87    -0.03
                                      
 Brazil Bovespa            103939.58      0.1
                                      
 Mexico IPC                 43372.09     0.36
                                      
 Chile IPSA                  5139.20     0.05
                                      
                                             
       Currencies           Latest    Daily %
                                      change
 Brazil real                  4.1236    -0.70
                                      
 Mexico peso                 19.2663     0.26
                                      
 Chile peso                   710.85    -0.06
                                      
 Peru sol                     3.3668    -0.35
                                      
 
     


 (Reporting by Susan Mathew in Bengaluru
Editing by David Goodman)
  
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