October 10, 2017 / 6:01 PM / a year ago

EMERGING MARKETS-Mexico peso down for fifth day ahead of NAFTA talks

    By Bruno Federowski
    SAO PAULO, Oct 10 (Reuters) - The Mexican peso weakened for
a fifth straight trading day on Tuesday amid increasing tensions
over Mexico's trade ties with the United States ahead of a new
round of talks this week.
    Trade officials from Mexico, the United States and Canada
meet on Wednesday in the Washington area for a fourth round of
talks on renegotiating the North American Free Trade Agreement.
    On the eve of the talks, U.S. President Donald Trump warned
again in an interview with Forbes that he would like to scrap
the treaty that created one of the world's biggest trade blocs.
    Fears of increased U.S. protectionism have hit the Mexican
peso particularly hard as the United States purchases over
three-quarters of Mexico's exports.
    Strategists at BNP Paribas recommended clients extend
hedging positions against volatility in the Mexican peso, citing
"increasing noise surrounding the NAFTA negotiations."
    The peso slipped 0.2 percent to the weakest since
early June, extending losses to 2.8 percent in five days.
    The decline contrasted with higher demand for emerging
market assets worldwide, which rose for the first day in three
after their recent weakness sparked bargain-hunting.
    Stronger-than-expected U.S. jobs data on Friday fueled
expectations that U.S. interest rates may rise faster than
expected in coming months, reducing the allure of high-yielding
    The Brazilian real strengthened 0.3 percent on
Tuesday, mirroring other emerging market currencies, such as the
South African rand and the Russian rouble.
    Stocks in developed economies also rose, with Brazil's
benchmark Bovespa stock index rebounding from a two-day
loss. Financial shares led the advance, while shares in
state-controlled oil company tracked oil prices
    Planemaker Embraer, however, fell as much as 6.4
percent after reporting a decline in deliveries in the third
quarter from the year before. Analysts at Banco BTG Pactual SA
said the figures could be a sign of weaker-than-expected
quarterly earnings.
    Key Latin American stock indexes and currencies at 1720 GMT:
 Stock indexes                    Latest        Daily  YTD pct
                                                  pct   change
 MSCI Emerging Markets              1111.48      1.01    27.62
 MSCI LatAm                         2946.55       0.6    25.13
 Brazil Bovespa                    76630.38      1.19    27.24
 Mexico S&P/BVM IPC                49932.99     -0.28     9.40
 Chile IPSA                         5467.14     -0.34    31.69
 Chile IGPA                        27356.72     -0.28    31.94
 Argentina MerVal                  27074.16      1.15    60.03
 Colombia IGBC                     11057.12      0.08     9.17
 Venezuela IBC                       531.11      0.65   -98.32
 Currencies                          Latest     Daily  YTD pct
                                                  pct   change
 Brazil real                         3.1744      0.34     2.36
 Mexico peso                        18.7225     -0.23    10.80
 Chile peso                           628.4      0.78     6.73
 Colombia peso                       2954.4     -0.24     1.59
 Peru sol                             3.265      0.18     4.56
 Argentina peso (interbank)         17.4200      0.23    -8.87
 Argentina peso (parallel)             17.8      0.39    -5.51
 (Reporting by Bruno Federowski; Editing by Tom Brown)
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