slips@ SAO PAULO, July 31 (Reuters) - Venezuelan dollar bonds fell on Monday as traders fretted over potential U.S. sanctions after a weekend election seen as increasing the powers of leftist President Nicolas Maduro. Opposition parties boycotted the election for a constitutional super-body that Maduro said would begin a "new era of combat," saying it was rigged. Ten people were killed in nationwide protests, making Sunday one of the deadliest days since massive protests started in early April. U.S. officials said Washington was considering sanctions on Venezuela's vital oil sector in response to the election, which it called flawed. Venezuela's sovereign and quasi-sovereign dollar bonds, mostly fell across the curve, extending Friday's large falls. Venezuela's benchmark sovereign bond maturing 2038 fell almost one cent at one point before snapping back to trade at around 40 cents in the dollar. It stayed off 13-month lows hit on Friday, Thomson Reuters data showed. Dollar bonds issued by state oil firm PDVSA tumbled across the curve. There was little sign of spillover into other Latin American markets, however, with most currencies range-bound. The Mexican peso underperformed, weakening 0.3 percent after a report showed economic growth slowing in the second quarter.
"Uncertainty with regard to the outcome of the 2018 presidential election and renegotiation of the NAFTA treaty are likely to continue to have a negative impact on activity," Goldman Sachs economists wrote in a report. "Important investment decisions may be postponed, scaled down or even canceled, particularly in export-oriented sectors." Trading volumes were muted in Brazilian markets as investors avoided making risky bets as the end of a congressional recess approached. Lawmakers are expected to vote on Wednesday whether to authorize the nation's top court to rule on corruption accusations against President Michel Temer. Traders widely expect Temer, whose platform of structural reform is considered critical by investors to boosting growth in Latin America's largest economy, to be cleared by the lower house of Congress. Still, the prosecutor-general's office is likely to file additional charges against the Brazilian leader in coming months, potentially delaying a planned pension reform further. Brazil's benchmark Bovespa stock index rose 0.4 percent, boosted by shares of miner Vale SA as iron ore prices surged. China-listed iron ore futures on Monday hit their trade limit-up, underscoring concerns over tight supply amid environmental inspections and strong restocking demand.
Shares of IRB Brasil Resseguros SA jumped 6.8 percent in their market debut after shareholders in Brazil's largest reinsurer raised almost 2 billion reais ($639 million) in an initial public offering last week.
Key Latin American stock indexes and currencies at 1705 GMT:
Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1064.84 0.18 23.28 MSCI LatAm 2744.71 -0.05 17.32 Brazil Bovespa 65741.23 0.37 9.16 Mexico S&P/BVM IPC 51024.15 -0.37 11.79 Chile IPSA 5044.71 -0.62 21.52 Chile IGPA 25217.45 -0.54 21.62 Argentina MerVal 21458.84 -1.06 26.84 Colombia IGBC 10910.35 -0.94 7.72 Venezuela IBC 139399.38 2.65 339.67 Currencies daily % YTD %
change change Latest
Brazil real 3.1280 0.17 3.87 Mexico peso 17.8495 -0.33 16.22 Chile peso 651.9 0.29 2.88 Colombia peso 2994.48 0.06 0.23 Peru sol 3.238 0.22 5.44 Argentina peso (interbank) 17.6700 0.74 -10.16 Argentina peso (parallel) 18.02 2.28 -6.66
(Writing by Bruno Federowski; Editing by Tom Brown)