Wires

EMERGING MARKETS-Mexican peso rises; Colombian shares hit 5-yr high

Susan Mathew

(Updates prices) Jan 6 (Reuters) - The Mexican and Colombian pesos ticked up on Monday against the dollar, which remained pressured by escalating tensions between the United States and Iran after the killing of a top Iranian general, while stocks in Colombia jumped 1%. The killing of Iranian Major-General Qassem Soleimani last week saw investors favor the Japanese yen and the Swiss franc, leaving an index of the dollar against a basket of rivals down 0.2%. Some emerging market currencies rose against the dollar, with South Africa's rand and Russia's rouble gaining over 0.5% each, while the Mexican and Colombian pesos rose more than 0.3%. Brazil's real traded steady. Chile's peso, however, fell 1.2% to hit an over three-week low, extending losses to a second session. Assets across the developing world had a solid end to 2019, helped by the cooling of trade tensions between Washington and Beijing, but rising geopolitical uncertainties have caused increased volatility at the beginning of the new year. Looking into the second half of the year, analysts warned Mexico's peso could be headed for choppy waters as the U.S. presidential election campaign could see President Donald Trump resort to using Mexico as a verbal pinata on issues of trade and migration to stoke his base. In Brazil, President Jair Bolsonaro told journalists on Monday that his administration will likely submit to the Congress in February a reform to reduce the size of the government, aiming to cut public spending. But data on Monday showed economic activity in December grew at its slowest pace in six months as a slight improvement in the services sector failed to compensate for a more disappointing performance in manufacturing. Regional shares painted a mixed picture, in line with a choppy session on Wall Street. The surge in Colombian shares to their highest since September 2014 was thanks to a 1.8% rally in heavily weighted Ecopetrol which tracked a rise crude prices.

Chile's main index touched a three-week peak, extending gains to a third straight session. "We don't think the newest flashpoint will derail the green shoots emerging in the global economy and yet it's powerful enough to trigger a positioning squeeze, especially in equities," Mark McCormick global head of FX strategy at TD Securities, wrote in a note. Shares listed in Mexico fell 0.3%, while Brazil's Bovespa index slipped 0.8%.

Key Latin American stock indexes and currencies at 1930 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1112.19 -1.04MSCI LatAm 2933.09 -1.19Brazil Bovespa 116712.92 -0.84Mexico IPC 44498.62 -0.28Chile IPSA 4885.46 0.95Argentina MerVal 41322.99 2.034Colombia COLCAP 1676.49 1.07Currencies Latest Daily %

change

Brazil real 4.0719 -0.42Mexico peso 18.8620 0.29Chile peso 772.5 -2.11Colombia peso 3244.21 0.18Peru sol 3.324 -0.27Argentina peso 59.8150 0.00

(interbank)

(Reporting by Susan Mathew in Bengaluru; Editing by Cynthia Osterman)