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EMERGING MARKETS-Brazil real leads Latam FX lower as trade concerns weigh

Susan Mathew

(Updates prices) Oct 7 (Reuters) - Latin American currencies slid on Monday after a three-day run of increases as the dollar gained favor amid skepticism over the outcome of U.S.-China trade talks this week. MSCI's index of Latin American currencies was down 0.8% after rising 1.9% last week, while its equities counterpart slumped 2%. Last week, worries about global growth and trade disputes initially hit sentiment, but U.S. data on Friday showing modest job growth quelled some recession worries and sparked a rally in risky assets. There were mixed signals on the trade front ahead of high-level talks scheduled for Oct 10-11. U.S. President Donald Trump's chief economic adviser on Monday said it was possible that the two sides could make progress during the talks, and that delisting Chinese companies is off the table. Over the weekend, a Bloomberg report said Chinese officials were reluctant to agree to Trump's demand for a broad trade deal. Brazil's real led losses, down more than 1%, while other Latam currencies fell between 0.2% and 0.6%, as trade worries outweighed optimism from a bill unveiled by the Brazilian central bank aimed at modernizing and simplifying the country's foreign exchange market. The bill is marginally positive, the head of trading at one bank said. The announcement had been widely flagged. "The highlight of the week (in terms of economic data in Brazil) will be the release of inflation for September and retail sales figures for August," wrote Credit Suisse analysts Leonardo Fonseca and Lucas Vilela in a note published before the unveiling of the forex bill. Inflation data is due on Wednesday and Credit Suisse expects an increase of 0.05% on a month-on-month basis for September, slower than the 0.1% rise last month, keeping the central bank on track for further easing. The bank has cut interest rates twice this year. Analysts expect retail sales to rise 0.3% month-on-month, a faster pace than a 0.1% increase in July. In Mexico, annual consumer price inflation likely cooled in September to a three-year low, potentially paving the way for further interest rate cuts by the central bank, a Reuters poll showed on Monday. The print is set for Oct 9. Stocks in the region were largely weaker, in line with a choppy session on Wall Street. Sao Paulo-listed shares shed 1.6% with broad-based losses, while those in Argentina were set to post their worst day in two weeks.

Latin American stock indexes and currencies 1930 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 993.51 -0.31MSCI LatAm 2639.77 -1.94Brazil Bovespa 100911.31 -1.6Mexico IPC 43029.93 -0.89Chile IPSA 5051.36 0.22Argentina MerVal 31221.66 -1.87Colombia IGBC 12940.43 -0.04Currencies Latest Daily %

change

Brazil real 4.1017 -1.12Mexico peso 19.5620 -0.28Chile peso 717.8 -0.32Colombia peso 3449.85 -0.54Peru sol 3.382 -0.09Argentina peso 57.8300 -0.14

(interbank)

(Reporting by Susan Mathew in Bengaluru; Editing by Dan Grebler)