EMERGING MARKETS-LatAm mixed; IMF launches new credit line

* IMF creates credit line for "well-run" emerging economies

* Mexico's mid-March inflation slows, supporting markets

* Venezuela says trying to prevent recession this year

By Walter Brandimarte

NEW YORK, March 24 (Reuters) - Latin American stocks ended
mixed on Tuesday, with investors in Brazil and Mexico pocketing
part of a recent rally while other markets took advantage of
the positive momentum brought by a U.S. plan to rid banks of
toxic assets.

News that the International Monetary Fund has launched a
new, flexible credit line for "well-run" emerging-market
economies also supported investor sentiment, but did not stop
most Latin American currencies from weakening. For details on
the new IMF line, see [ID:nN24572204].

"Unsurprisingly, profit-taking hit U.S. stocks, which
closed weak after Monday's massive rally. Emerging-market
assets managed to hold relatively steady, IMF news partly
helping," RBC Capital Markets' analysts said in a research
note.

The MSCI stock index for Latin America .MILA00000PUS
declined 1.37 percent following a rally of nearly 5.0 percent
on Monday, when the U.S. Treasury unveiled a series of
incentives for private investors to help rid banks of up to $1
trillion in toxic assets.

Brazil's benchmark Bovespa index .BVSP lost 2.27 percent,
Mexico's IPC index .MXX declined 0.51 percent, and Chile's
blue-chip IPSA index .IPSA dipped 0.21 percent.

Losses in Mexico were cushioned by an inflation report
which confirmed expectations that the central bank will be able
to be more aggressive in cutting interest rates.

Mexico's consumer prices rose 5.98 percent in the 12 months
through March 15, down from 6.25 percent in the year through
mid-February. The number was a little above economists'
expectations but still below the 6 percent psychological
threshold. [ID:nN24352040]

On the other hand, equity markets in Argentina .MERV,
Colombia .IGBC and Peru .IGRA still closed higher, with
many stocks still catching up with the regional rally on
Monday.

Despite the overall profit-taking, yield spreads between
emerging-market debt and U.S. Treasuries narrowed 7 basis
points to 625 points on the JPMorgan EMBI+ index 11EMJ. The
move reflected hopes that global appetite for risk may continue
to rise as the United States implement its plan to rid banks of
toxic assets.

In the foreign-exchange market, the Brazilian real ended
practically stable at 2.244 per U.S. dollar. The Mexican peso
MXN=, the Argentine peso ARSB= and the Peruvian sol
PEN=PE all posted losses of about 0.5 percent.

The Mexican peso was partially hurt on Monday by Fitch
Ratings' warning that the country could be downgraded if the
government has an "inappropriate response" to rising fiscal
pressures in 2010.

In a statement released on Tuesday, however, Moody's
Investors Service said an expected revenue shortfall next year
"is unlikely to seriously compromise Mexico's near-term fiscal
outlook."

But the ratings agency still said that "Mexico's inability
to deal with structural issues, combined with persistent
shocks, can weaken its credit fundamentals." [ID:nWNA9850]

Meanwhile, in Venezuela, Finance Minister Ali Rodriguez
said he is trying to avoid a recession in the oil-exporting
country this year.

Finally abandoning the government's 6 percent growth target
for 2009, the minister said any economic growth this year would
be good for Venezuela. [ID:nN24354485]

HELP FOR "WELL-RUN" ECONOMIES

The new credit line announced by the IMF on Tuesday will
give a select group of emerging countries that meet a set of
tough conditions access to a pool of money which they do not
need to tap immediately, but can hold on to in case financing
conditions worsen.

The overhaul of the Fund's lending facility was applauded
by Brazilian Finance Minister Guido Mantega, who said however
that the country does not need the money. [ID:nN24362107]

The new line represents a "major improvement" from the
original short-term liquidity facility established by the Fund
in October, Goldman Sachs' Senior Economist Alberto Ramos said
in a note to clients.

"The flexible credit line seems particularly suitable for
the needs of countries such as Mexico," Ramos said, adding that
Brazil, Chile, Colombia and Peru should also qualify for the
credit instrument.