February 26, 2019 / 9:58 PM / 8 months ago

EMERGING MARKETS-Latam stocks subdued as trade optimism fizzles out; FX rises

 (Recasts throughout, updates prices, adds market strategist's
    By Agamoni Ghosh
    Feb 26 (Reuters) - Most Latin American stocks were subdued
on Tuesday as trade optimism cooled and global growth fears
continued to weigh on sentiment, while currencies in the region
steadied against a weak dollar.
    U.S. President Donald Trump cited the recently held trade
talks as the reason for not raising tariffs further on Chinese
goods, saying negotiators were close to a deal.
    He however, sounded a note of caution, saying "the deal
could happen fairly soon, or it might not happen at all,"
limiting gains for global equities. 
    MSCI's index for stocks in Latin America
fell 0.3 percent as most indices in the region slipped. 
    The dollar, meanwhile, sank to a three-week low boosting
currencies in the region after Federal Reserve Chairman Jerome
Powell suggested he was unlikely to raise interest rates anytime
    Powell further said despite a strong U.S. economy, growth
could be at slower pace and predominant risk still lay with
global growth figures especially from Europe and China. 
    Shares on Mexico's IPC index fell marginally dragged
mainly by mining company Penoles which tumbled over
6 percent on profit miss and fiscal year 2019 warning.
    A weak dollar did little to lift Mexico's peso which
slipped 0.14 percent. Rating agency Moody's said it saw
significant pressure on the country's sovereign credit rating
even as President Andres Manuel Lopez Obrador seeks to revive
state oil firm Pemex.
    Pemex holds $106 billion in financial debt, the highest of
any state oil company in Latin America. 
    "The government is still not accepting the scale of the
problem facing PEMEX. The measures that we have seen so far are
not going to cut it when it comes to providing support," said
Christian Lawrence, senior market strategist, LatAm FX,
    Stocks in Chile slipped further away from
eight-month highs hit in the earlier session, while the peso
 tested its best levels since August 2018, helped by an
advance in the price of copper, the country's main export. 
    Argentina's Merval index declined in broad-based
gains led by declines in shares of steel producer Tenaris
 after Barclays cut their price target on the stocks. 
    Shares on the Bovespa bucked trend, gaining 0.4
percent led by financial and material stocks, while the
Brazilian real tacked 0.1 percent. 
    Planemaker Embraer climbed 4.3 percent at its
best after the company's shareholders approved an agreement to
sell 80 percent of its commercial aircraft division to Boeing Co
    The country's Senate on Tuesday approved Roberto Campos Neto
as president of the country's central bank. Neto had earlier
indicated there would be no immediate change in monetary policy.

    Colombia's peso firmed 0.7 percent, the most in the
region, while local stocks also rose with energy firm
Ecopetrol SA riding on the back of higher oil prices.
    Key Latin American stock indexes and currencies at 2135 GMT
 Stock indexes                             daily %
                               Latest       change
 MSCI Emerging Markets           1064.94     -0.25
 MSCI LatAm                      2882.52     -0.33
 Brazil Bovespa                 97602.50      0.37
 Mexico IPC                     43623.33     -0.09
 Chile IPSA                      5475.54     -0.08
 Argentina MerVal               36026.63     -0.84
 Colombia IGBC                  12324.72      0.79
 Currencies                                daily %
 Brazil real                      3.7482      0.11
 Mexico peso                     19.1704     -0.23
 Chile peso                        647.8      0.36
 Colombia peso                      3079      0.73
 Peru sol                          3.303      0.03
 Argentina peso (interbank)      38.8700      0.46

 (Reporting by Agamoni Ghosh in Bengaluru; Editing by Lisa
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