EMERGING MARKETS-Latam FX hit new lows, Brazil stocks sink 15%

Susan Mathew

* Mexico's peso drops 4%, Colombia peso at 4,030

* Oil prices slide

* Brazil's Bovespa index set for worst day in more than 2 decades

* Azul, LATAM Airlines dive; to cut international flights

March 12 (Reuters) - The Mexican peso plunged 4% to new lows on Thursday, as did other Latin American currencies, while regional stocks nosedived after Washington's surprise move to curb travel from Europe exacerbated fears that the coronavirus pandemic would slam global growth. U.S. President Donald Trump imposed sweeping restrictions on travel from Europe on Thursday and also unveiled economic steps to counter the impact of the pandemic which disappointed investors as they were light on details.

A rebounding dollar also added to the mix as investors scrambled for the greenback as swap spreads on major currencies blew out and the euro dropped after the European Central Bank announced more stimulus to fight the coronavirus impact but held on rates. As oil prices slid, crude exporter Mexico's peso touched 22.86 to the dollar and was set for its worst day in more than three years, while Colombia's currency gave up 3.5% to hit new lows of 4,030.94. "It's a risk off sentiment triggered by Trump's decision to ban flights which sends signals that we may get more draconian measures in the U.S. to contain the virus. That has hit oil prices," said Edward Glossop, a Latin America economist at Capital Economics. Brazil's real breached 5 to the dollar for the first time. The central bank announced an auction of $2.5 billion in the spot market. "It's worth mentioning that the (Brazilian) central bank still has ample instruments to intervene in the FX market with international reserves amounting $362 billion at the end of Feb. 20," said EM strategists at Citi Research. As the copper price fell to three-year lows, the currency of the world's largest copper producer, Chile, fell 1.2%

In line with a plunge in equity markets worldwide, an index of regional stocks tanked 13% to four-year lows. Brazilian stocks slumped 15% after trading resumed following an automatic halt once it breached 10%. Sao Paulo's Bovespa index was set for its worst day since 1998. Miner Vale shed 16%, while preferred shares of oil firm Petrobras tumbled 20%. Carrier Azul dropped a whopping 34% after it became the first Latin American carrier to implement a hiring freeze and put some workers on unpaid leave amid collapsing demand. LATAM Airlines followed suit, saying it will cut capacity on international flights by up to 30%, sending its shares down 13%. The stock was on course for its biggest one-day drop since 2002. Chile's main stock index fell 5.2% to a four-year low. Mexican stocks slid 7% to their lowest in more than eight years, while Colombia's COLCAP index slid 6.8% as oil firm Ecopetrol dived almost 11%.

Key Latin American stock indexes and currencies at 1440 GMT:

Stock indexes Latest Daily %


MSCI Emerging Markets 886.43 -6.36MSCI LatAm 1702.29 -13.97Brazil Bovespa 72026.68 -15.43Mexico IPC 35969.98 -7Chile IPSA 3720.03 -6.52Argentina MerVal 28516.67 -9.239Colombia COLCAP 1203.31 -7.11Currencies Latest Daily %


Brazil real 4.8810 -3.30Mexico peso 22.3378 -4.29Chile peso 852.4 -1.99Colombia peso 4030.94 -3.54Peru sol 3.5488 -0.90Argentina peso 62.7600 -0.14


(Reporting by Susan Mathew in Bengaluru Editing by Frances Kerry)