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EMERGING MARKETS-Latam FX, stocks rise; Mexican peso falls

Susan Mathew

June 3 (Reuters) - Mexico's peso stayed at five-month lows on Monday as investors awaited further developments after U.S. President Donald Trump threatened to impose tariffs on Mexican imports, while most other Latin American currencies firmed against a softer dollar. Mexico's peso was down 0.6%, compared with gains of between 0.2% to 0.6% by other regional currencies on the back of weakness in the greenback. As negotiations between Mexico and United States are set to begin on Monday in Washington, Mexican President Andres Manuel Lopez Obrador said an agreement could be reached with the United States to resolve a dispute over migration. Mexican markets fell sharply on Friday after Trump said a 5 percent tariff would be imposed on all Mexican exports to the United States starting June 10. The tariffs would rise per month until they reached 25 percent and stay at that rate until Mexico stops the inflow of migrants into the United States via the southern border. "Markets in particular want to know if the June 10 tariff will be a reality. At this point markets are mostly pricing in that it will be a reality," said Per Hammarlund, chief emerging market strategist at SEB. "Markets are not convinced at this stage that Trump will hike tariffs until 25 percent simply because it would be too disruptive of U.S. business interests," he said pointing to how highly the auto sector is integrated between the two countries. "It would be noticeable on U.S. car prices, and I think Trump is not going to risk that ahead of elections next year." Mexican shares rebounded from last session's decline to rise 0.3%, in line with other regional as well as broader emerging market peers. Energy infrastructure company IEnova was the biggest gainer in Mexico, up 2.5%, followed by cement producer Cemex , 1.9% higher. In Brazil, the real hit an more than a six-week high, while the Bovespa stock index climbed 0.3% with oil company Petrobras providing the biggest boost. Investors seemed to shrug off data showing Brazilian manufacturing activity slowed to its weakest pace in 10 months in May. Stocks markets in Colombia were closed for a local holiday.

Key Latin American stock indexes and currencies at 1425 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1008.88 1.09MSCI LatAm 2695.50 0.44Brazil Bovespa 97298.77 0.28Mexico IPC 42891.60 0.33Chile IPSA 5004.34 0.55Argentina MerVal 34184.26 0.69Currencies Latest Daily %

change

Brazil real 3.9008 0.56Mexico peso 19.7300 -0.60Chile peso 707.2 0.27Peru sol 3.375 0.18Argentina peso 44.7300 0.04

(interbank)

(Reporting by Susan Mathew in Bengaluru;)