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EMERGING MARKETS-Latam forex falls as investors avoid riskier assets on trade fears

Agamoni Ghosh


* Petrobras posts its highest ever quarterly profit Latin American currencies worst day in 2019

* EM stocks on biggest slide since December 2015

Aug 2 (Reuters) - Latin American currencies fell on Friday as U.S.-China trade tensions pulled investors away from riskier assets, but a smashing quarter from Brazilian state-run oil firm Petrobras helped Brazil stocks outperform regional indices. U.S. President Donald Trump vowed to hike tariffs on Chinese imports starting on Sept. 1 on Thursday, a day after negotiators from both countries concluded a meeting in Shanghai without significant signs of progress to end a trade war. Emerging market assets, already reeling from the U.S. Federal Reserve's hawkish rate-cut outlook earlier this week, fell to near two-month lows, with Latin American currencies on course to post their worst week for 2019. "While Trump has not closed the doors for more talks ... we do not expect a trade deal between the U.S. and China to materialize," said Piotr Matys, Rabobank emerging markets FX strategist. "Even if an agreement is reached, it is likely to be weak and unsustainable as China will be reluctant to implement required structural reforms to satisfy the U.S." Stocks in the region fell across the board but Sao Paulo's Bovespa stocks bucked the trend after Petrobras posted its highest ever quarterly profit, credited in large part to billions of reais in asset sales. Shares of state-run power company Eletrobras rose 3.5% after President Jair Bolsonaro approved its privatization plan.

Mexico's IPC index was at its lowest level since May, while stocks in Chile were on track to post their third consecutive session of losses. Chile's peso fell 0.6%, partly hurt by a dip in copper prices, its main export. Minutes released from the central bank's recent meeting showed policymakers in Chile considered cutting the benchmark interest rate, but ultimately opted to maintain it, citing a "relatively limited benefit." Chile, the world's top copper producer has shown a below-expected economic performance, in part due to weaker mining activity and the impact the U.S.-China trade dispute has had on the price of the metal.

Key Latin American stock indexes and currencies at 1435 GMT

Stock indexes daily % change


MSCI Emerging Markets 1002.73 -2.13MSCI LatAm 2747.48 -1.72Brazil Bovespa 101867.11 -0.10Mexico IPC 39852.59 -1.22Chile IPSA 4888.80 -1.05Argentina MerVal 40727.38 -1.6Colombia IGBC 12484.52 -0.27Currencies daily % change


Brazil real 3.8820 -0.91Mexico peso 19.3113 -0.41Chile peso 710.7 -0.61Colombia peso 3364.48 -0.77Peru sol 3.339 -0.39Argentina peso 44.6800 -0.65


(Reporting by Agamoni Ghosh in Bengaluru Editing by Susan Thomas)