Top Stories
Top Stories
Wires

EMERGING MARKETS-Latam assets slump on trade tensions; Brazil's real near 1-year low

Agamoni Ghosh

1-year low@ (Updates prices, adds quote)

* Brazilian real touches near 1-year low

* Latam stocks and currencies at 2019 lows

* IMF team to meet Fernandez advisors in Argentina

Aug 26 (Reuters) - Latin American stocks and currencies fell on Monday as investors fled from riskier assets on fears an escalation in the U.S.-China trade war will inflict further damage on global growth. U.S. President Donald Trump said Chinese officials had contacted Washington about resuming trade negotiations, after signs of escalation in the U.S.-China trade dispute had roiled markets since Friday. Although equity markets in Europe and the United States managed to stave off the pessimism from the underlying trade tensions, MSCI's index of Latin American stocks slumped over 2%, as sentiment still remained shaky, forcing investors to avoid risky emerging market assets. "EM markets have burned a couple of times this year due to trade tensions and investors are much more skeptical now," said Win Thin, global head of emerging market strategy at Brown Brothers Harriman. "They (U.S. and China) are only talking at this point, but in terms of a deal, really don't see one until 2020." Currencies in the region were also hit as the greenback gained some strength after the world's two largest economies attempted to ease trade war tensions. Brazil's real slipped 0.7%, trading at nearly one-year lows as the bout of trade rhetoric as well as weak economic signals pressured the currency. Data showed Brazil's balance of payments position with the rest of the world deteriorated sharply in July, as the current account deficit unexpectedly ballooned to $9 billion. Further, inflation expectations for Latin America's largest economy this year and next fell to new lows, strengthening the view that the central bank will cut interest rates again this year. Sao Paulo stocks fell over 1% in broad-based declines across sectors but payment processor Cielo SA moved higher after the company said it will launch digital banking services in October, challenging the country's long-established bric and mortar banks. Mexican stocks were among the few gainers, climbing 0.3%, while the peso was marginally higher. Chile's peso was mostly flat, while stocks on the SPIPSA index slid 0.6%. Argentina's peso closed 0.2% lower with focus on a meeting between the representatives of International Monetary Fund and economic advisers to opposition candidate Alberto Fernandez, the frontrunner for October's presidential election. Fernandez, a critic of Argentina's $57 billion IMF standby agreement negotiated in 2018 by pro-reform President Mauricio Macri, has pledged to "rework" the program if elected.

Key Latin American stock indexes and currencies at 1930 GMT

Stock indexes daily %Latest changeMSCI Emerging Markets 960.68 -1.33MSCI LatAm 2469.42 -2.48Brazil Bovespa 96233.97 -1.47Mexico IPC 40028.85 0.32Chile IPSA 4618.37 -0.65Argentina MerVal 26069.79 -1.942Colombia IGBC 12363.52 0.56Currencies daily %Latest changeBrazil real 4.1503 -0.66Mexico peso 19.9080 0.02Chile peso 719 -0.11Colombia peso 3431 -0.28Peru sol 3.382 -0.21Argentina peso 55.2900 -0.18

(interbank)

(Reporting by Agamoni Ghosh in Bengaluru; Editing by Cynthia Osterman)