December 4, 2018 / 9:45 PM / 10 days ago

EMERGING MARKETS-Latam stocks, FX fall as trade and growth worries sour global sentiment

 (New throughout, updates prices, market activity and comments)
    By Susan Mathew
    Dec 4 (Reuters) - Emerging market shares and currencies
declined on Tuesday, in line with world markets, as investors
fretted that an inversion of part of the U.S. Treasury yield
curve could signal a looming recession and cast skeptical eyes
on the U.S.-China trade truce.
    The MSCI index of Latin American shares slid
1.1 percent led by Brazil stocks. A weaker dollar did little to
support regional currencies and the currency index
 dipped 0.2 percent.
    "There is a lot of equity selling and it's probably bleeding
over in general to markets. It's a typical risk-off move," said
Sacha Tihanyi, deputy head of emerging markets strategy at TD
Securities.
    The dollar and Wall Street fell as an inversion of part of
the U.S. Treasury yield curve fed investor worries about
slackening global growth.
    Investors were also concerned about uncertainty surrounding
details of the truce in the U.S.-China trade war. 
    Mexico's peso and stocks declined as investors
grew less enthusiastic about the new administration even after
it announced repurchase of some debt used to fund a partly built
airport it had canceled.
    "The issues are more longer term with the government and its
unpredictability regardless of what happens with the bond
buyback," Tihanyi said.
    The Brazilian real weakened, while broad stock market
losses took the Bovespa index down 1.3 percent after
three days of hitting record highs. 
    Brazil's Supreme Court authorized a federal investigation
into allegations the incoming chief of staff for far-right
President-elect Jair Bolsonaro had taken illegal campaign
donations.
    It was the second accusation of graft against a top member
of the incoming government. Brazil assets had rallied after
Bolsonaro was elected in October on a vow to end widespread
political corruption.  
    Brazil's central bank governor sought to reassure markets
that the country has "robust shock absorbers" to cushion
external turbulence.
    The Argentine peso fell more than 2 percent due to
hedging by private investors and a lower rate set by the central
bank on its daily liquidity bills.
    The Chilean peso fell 0.3 percent. The country's
central bank kept the benchmark borrowing rate unchanged at 2.75
percent as expected.
    
    Key Latin American stock indexes and currencies at 2120 GMT:
    Stock indexes             Latest    Daily %    YTD %
                                         change    change
 MSCI Emerging Markets         1014.25     -0.26    -12.45
                                                  
 MSCI LatAm                    2611.71     -1.14     -7.65
                                                  
 Brazil Bovespa               88624.45     -1.33     16.00
                                                  
 Mexico IPC                   41870.05      -0.5    -15.16
                                                  
 Chile IPSA                    5149.11     -0.05     -0.05
                                                  
 Argentina MerVal             31958.33      0.22      6.30
                                                  
 Colombia IGBC                11977.70     -0.87      5.34
                                                  
                                                          
       Currencies             Latest    Daily %    YTD %
                                         change    change
 Brazil real                    3.8520      0.16    -13.98
                                                  
 Mexico peso                   20.5210     -0.82     -4.01
                                                  
 Chile peso                      670.3     -0.22     -8.30
                                                  
 Colombia peso                 3171.64      0.48     -5.98
 Peru sol                        3.381      0.00     -4.26
                                                  
 Argentina peso                37.3500     -2.17    -50.20
 (interbank)                                      
                                                  
 
 (Reporting by Susan Mathew in Bengaluru; Editing by David
Gregorio)
  
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