EMERGING MARKETS-Latam FX firm as dollar drops; U.S. tariffs pressure stocks

Susan Mathew

* Trump to restore tariffs on metal imports from Brazil, Argentina

* Latam FX gain as dollar drops after weak U.S. manufacturing data

* Brazil stocks rise after strong manufacturing data

* Chilean peso firms as central bank intervention kicks in

Dec 2 (Reuters) - A dollar weakened by poor U.S. economic data helped Latin American currencies brush off the re-imposition of U.S. tariffs on steel and aluminum imports from Brazil and Argentina on Monday. Brazil's real firmed 0.4% with a spot auction by the central bank supporting the currency, while the Argentine and Mexican pesos were flat against a dollar that slid on weak U.S. manufacturing data. Surprising officials in the two South American countries, U.S. President Donald Trump said on Monday he would restore tariffs on U.S. steel and aluminum imports, accusing them of devaluing their currencies to the detriment of U.S. farmers. Brazil's benchmark Bovespa index rose as mine Vale advanced on higher iron ore prices, and as retailer Via Varejo posted strong Black Friday sales, but other Latam equity markets slipped. Argentine stocks fell almost 3%, snapping three days of gains, and led losses in the region. Aluminum producer Alua Aluminio Argentino was the worst performer on the index, down more than 10%. "The main thing is that trade tensions aren't going away," said Win Thin, global head of emerging market currency strategy at Brown Brothers Harriman in New York. "Markets had been pretty complacent about a U.S.-China trade deal and the U.S.-Mexico-Canada trade deal. There was a lessening in tensions, and this goes against that." But since no official announcement has been made, markets will await more clarity and justification, he said. The real eased 0.4% immediately after the tweet, but reversed course after the central bank sold 9,600 reverse currency swap contracts and $480 million in spot currency.

Data showing Brazil's manufacturing growth in November also supported sentiment as it pointed to a steady recovery in Latin America's largest economy. Similar data in Mexico, however, showed November manufacturing activity slowed to its most sluggish pace in over 8-1/2 years on the back of economic uncertainty, declining business confidence and weak demand. The Chilean peso firmed as the central bank's $20 billion currency intervention program kicked in. The bank had outlined the plan last week after the peso hit a record low against the dollar. The peso was also supported by higher prices for copper, Chile's largest export, as markets perceived increased demand for the metal following the stronger-than-expected Chinese data.

Key Latin American stock indexes and currencies at 19:30 GMT:

Stock indexes Latest Daily %


MSCI Emerging Markets 1039.88 -0.02MSCI LatAm 2667.01 0.38Brazil Bovespa 109056.54 0.76Mexico IPC 42679.10 -0.33Chile IPSA 4499.70 -0.86Argentina MerVal 33526.09 -2.824Colombia Colcap 1597.75 -0.88Currencies Latest Daily %


Brazil real 4.2197 0.45Mexico peso 19.5750 -0.07Chile peso 803.2 0.07Colombia peso 3503 0.36Peru sol 3.391 0.41Argentina peso 59.9600 -0.03


(Reporting by Ambar Warrick and Susan Mathew in Bengaluru; Editing by Richard Chang)