August 23, 2017 / 10:18 PM / in a year

EMERGING MARKETS-Mexico peso shakes off Trump NAFTA threat; Brazil stocks up

 (Recasts with peso reversing losses)
    MEXICO CITY, Aug 23 (Reuters) - The Mexican peso shook off
early losses on Wednesday as the market doubted U.S. President
Donald Trump would make good on threats to pull out of the North
American Free Trade Agreement (NAFTA).
    At a campaign-style rally in Arizona late on Tuesday, Trump
in a speech that played to his conservative base of support
warned he might terminate the NAFTA pact with Mexico and Canada
if three-way talks failed to bridge deep differences.
    Top officials in both Mexico and Canada dismissed Trump's
threat as a negotiating tactic.
    The Mexican peso depreciated 1 percent early in the session,
but it retraced those losses to trade near flat.
    "The irrational comments of (Trump) again raised doubts
about the stability of his administration, which has been losing
credibility in the face of financial markets," said Gabriela
Siller, analyst at Banco BASE.
    Mexico's peso has been the best performing currency this
year, up more than 17 percent, as it rocketed back from a record
low in January on bets Trump will not scrap NAFTA. 
    The first round of trade talks ended on Sunday with little
sign of any breakthrough coming.
    Brazil's benchmark Bovespa stock index rose about
0.6 percent to close at its highest since January 2011 as the
government announced a raft of privatizations. The Brazilian
real strengthened more than 1 percent.
    A government council approved a massive sale of state assets
including stakes in some of Brazil's busiest airports as well as
oil exploration, highway and power dam licensing rights, as
President Michel Temer seeks to reduce state involvement in the
economy and cut a widening budget gap.
    Still, shares of Centrais Elétricas Brasileiras SA
 fell 11 percent as traders booked profits from a 50
percent jump on Tuesday. A government proposal to privatize
Eletrobras, as the power utility is known, fueled hopes of lower
debts and higher efficiency at the firm.
    Latin American stock indexes and currencies at 20:34 GMT:
 Stock indexes                     Latest        Daily   YTD pct
                                                   pct    change
 MSCI Emerging Markets               1,075.60    +0.29    +24.74
 MSCI LatAm                          2,859.69    +0.10    +22.18
 Brazil Bovespa                     70,477.63    +0.67    +17.02
 Mexico S&P/BVM IPC                 51,280.17    -0.10    +12.35
 Chile IPSA                          5,127.93    +0.26    +23.52
 Chile IGPA                         25,613.97    +0.19    +23.54
 Argentina MerVal                   23,256.86    +1.56    +37.47
 Colombia IGBC                      10,974.98    +0.15     +8.36
 Venezuela IBC                     198,170.53    +0.07   +525.04
 Currencies                                    daily %     YTD %
                                                change    change
 Brazil real                           3.1411    1.019     +3.44
 Mexico peso                           17.665     0.01    +17.43
 Chile peso                           640.180    +0.09     +4.77
 Colombia peso                      2,980.000    +0.13     +0.72
 Peru sol                               3.237    +0.03     +5.47
 Argentina peso (interbank)            17.220    -0.03     -7.81
 Argentina peso (parallel)             18.250    +0.38     -7.84
 (Reporting by Michael O'Boyle;Editing by Cynthia Osterman)
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