EMERGING MARKETS-LatAm currencies weaker on prospects of tighter policy abroad

abroad@ SAO PAULO, Jan 29 (Reuters) - Latin American currencies weakened on Monday as prospects of tighter monetary policy throughout developed markets drove investors away from high-yielding assets. Dutch central bank president Klaas Knot said on Sunday that "there is no reason whatsoever" for the European Central Bank (ECB) to continue its asset purchase program, suggesting years of policy stimulus may be coming to an end sooner than expected. His remarks added to a growing perception that strong global growth could force policymakers to tighten policy faster in coming months, potentially draining funds away from emerging markets. Some economists expect the Federal Reserve to raise its economic assessment when it concludes its two-day meeting on Wednesday, which would increase the probability that the U.S. central bank raises interest rates four times this year. The U.S. government's key payrolls report, scheduled for Friday, could also shed further light on the outlook for monetary policy. Currencies from Chile, Colombia, Mexico and Brazil weakened between 0.5 percent and 1 percent, capping a January rally that saw all of them post hefty gains in 2018. Stock markets were mixed, with Brazil's benchmark Bovespa stock index down 1 percent as traders booked profits on recent gains that drove it to all-time highs. Shares of wood pulp producer Fibria Celulose SA, however, jumped 8 percent, the biggest gainer on the index, on a report that Netherlands-based Paper Excellence was considering acquiring it. Paper Excellence, which is controlled by the owners of Indonesia's Asia Pulp & Paper Co Ltd, has hired Banco BTG Pactual SA to advise on a possible acquisition of Fibria, newspaper O Globo reported on its website, without saying how it obtained the information. But two sources close to Fibria told Reuters the company is not seeking a buyer and that controlling shareholders have not received any bid.

Key Latin American stock indexes and currencies at 1550 GMT:

Stock indexes daily % YTD %

change change Latest

MSCI Emerging Markets 1267.04 -0.47 9.89 MSCI LatAm 3195.33 -1.42 14.61 Brazil Bovespa 84708.06 -0.96 10.87 Mexico IPC 50748.93 -0.62 2.83 Chile IPSA 5869.19 0.23 5.47 Chile IGPA 29472.34 0.2 5.33 Argentina MerVal 34395.97 -2.08 14.40 Colombia IGBC 12356.51 -0.02 8.67 Currencies daily % YTD %

change change Latest

Brazil real 3.1693 -0.94 4.54 Mexico peso 18.6775 -1.01 5.47 Chile peso 604.62 -0.50 1.66 Colombia peso 2844.52 -1.11 4.83 Peru sol 3.217 -0.53 0.62 Argentina peso (interbank) 19.5600 0.06 -4.91 Argentina peso (parallel) 19.99 -0.05 -3.80

(Reporting by Bruno Federowski; Editing by Susan Thomas)