June 18, 2018 / 3:40 PM / 5 months ago

EMERGING MARKETS-Trade war fears knock LatAm markets; Argentine peso up

    By Bruno Federowski
    BRASILIA, June 18 (Reuters) - Escalating fears of a damaging
trade war between the United States and China drove Latin
American currencies lower on Monday and knocked blue-chip stocks
across the region, but central bank action supported the
Argentine peso.
     The United States on Friday detailed $50 billion of Chinese
imports to face 25 percent tariffs. The move prompted a swift
response from Beijing, which said it would sanction $50 billion
of U.S. imports and suspend all previous trade agreements with
the Trump administration.
    Trade friction concerns between the world's top two
economies have weighed on demand for riskier, emerging-market
assets through the year, a trend that persisted in Latin America
on Monday.
    Currencies from Brazil, Mexico, Chile
 and Colombia weakened between 0.5 and 1 percent.
    "After the confirmation of the U.S. protectionist attack,
risk aversion is exerting substantial pressure over markets,"
analysts at Nova Futura brokerage wrote in a client note.
    The Argentine peso, however, jumped 2.7 percent,
after the central bank said it will hike reserve requirements
for banks by 5 percentage points in a move expected to absorb
100 billion pesos ($3.63 billion) from the financial system
after the latest run on the currency.
    Stocks markets also fell throughout the region, tracking a
wider emerging market slump as MSCI's emerging market index
 fell for a fourth straight day.
    Blue-chip stocks, such as Brazilian state-controlled oil
company Petróleo Brasileiro SA, miner Vale SA
 and lender Itaú Unibanco Holding SA, led
declines.
    
    Key Latin American stock indexes and currencies at 1510 GMT:
 Stock indexes                               daily %   YTD %
                                              change  change
                                  Latest              
 MSCI Emerging Markets              1103.97    -0.88   -3.86
 MSCI LatAm                         2413.75    -0.57  -14.16
 Brazil Bovespa                    69897.41    -1.22   -8.51
 Mexico IPC                        46371.78    -1.21   -6.04
 Chile IPSA                         5457.26    -0.24   -1.93
 Chile IGPA                        27608.08    -0.18   -1.33
 Argentina MerVal                  28154.64    -6.61   -6.36
 Colombia IGBC                     12362.57     1.48    8.72
                                                            
 Currencies                                  daily %   YTD %
                                              change  change
                                     Latest           
 Brazil real                         3.7532    -0.68  -11.72
 Mexico peso                        20.7165    -0.48   -4.91
                                                      
 Chile peso                           638.7    -0.77   -3.77
 Colombia peso                       2921.2    -0.95    2.08
 Peru sol                              3.28     0.00   -1.31
 Argentina peso (interbank)         27.7000     2.71  -32.85
                                                      
 Argentina peso (parallel)            27.85     0.90  -30.95
                                                      
 
 (Reporting by Bruno Federowski
Editing by Tom Brown)
  
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