×

EMERGING MARKETS-Mexico's peso slips ahead of second NAFTA negotiation round

(Updates with final data) SAO PAULO, Aug 31 (Reuters) - Mexico's peso fell on Thursday amid threats by U.S. President Donald Trump to abandon the North American Free Trade Agreement (NAFTA) in the run-up to a second round of talks to update the accord. The currency slipped nearly 1 percent against the dollar, a day before negotiators meet in Mexico City on Friday to try and advance reworking the 23-year-old deal. "The foreign exchange market is awaiting the second round of (NAFTA) negotiations starting this Friday in Mexico for more information about the future of the accord," lender Banco Base said in a note to clients. Trump has used Twitter, press conferences and speeches to attack NAFTA in recent days, a move Mexican and Canadian officials regard as a negotiating strategy to wring concessions, but which has heightened uncertainty over the trade deal. Elsewhere, Chile's peso and the Brazilian real strengthened as strong Chinese industrial figures lifted metal prices. Growth in China's manufacturing sector unexpectedly accelerated in August, suggesting the world's second-largest economy is still expanding at a healthy clip. The data fueled bets on strong demand for basic metals, lifting prices of major Latin American exports such as iron ore and copper. That provided a further boost to the Chilean peso's recent rally, driving it near two-year highs. "The Chilean peso has been on a tear, boosted by rising copper prices," strategists at Brown Brothers Harriman wrote in a report. "We think the copper rally is overdone, but the growth outlook has improved, while political uncertainty may pick up as November elections approach." Political uncertainty increased on Thursday after Chilean Finance Minister Rodrigo Valdes resigned, citing differences over economic policy with members of President Michelle Bachelet's center-left coalition government. Some saw Valdes' resignation, ahead of the November presidential and parliamentary elections, as a blow to the center-left and its presidential candidate, Alejandro Guillier, a senator who is most closely tied to Bachelet's coalition. Brazil's real strengthened 0.6 percent in volatile trading as investors tried to influence a benchmark foreign exchange rate calculated at the last trading day of each month.

Key Latin American stock indexes and currencies at 2305 GMT:

Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1087.70 -0.03 26.14 MSCI LatAm 2873.10 0.22 22.75 Brazil Bovespa 70835.05 -0.07 17.61 Mexico S&P/BVM IPC 51210.48 0.03 12.20 Chile IPSA 5153.15 -0.06 24.13 Chile IGPA 25726.70 -0.02 24.08 Argentina MerVal 23588.98 0.41 39.43 Colombia IGBC 11048.63 1.55 9.09 Venezuela IBC 235413.91 4.41 642.51 Currencies daily % YTD %

change change Latest

Brazil real 3.1475 0.4 3.23 Mexico peso 17.7885 -0.98 15.99 Chile peso 626.6 0.62 7.04 Colombia peso 2949.30 0.16 1.77 Peru sol 3.240 0.00 5.37 Argentina peso (interbank) 17.27 0.46 -8.08 Argentina peso (parallel) 18.21 0.00 -7.63

(Additional reporting by Sheky Espejo; Editing by Lisa Von Ahn and Cynthia Osterman)