EMERGING MARKETS-Latam stocks fall on 'fiscal cliff' and Europe

Fri Nov 9, 2012 10:20am EST

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* Brazil Bovespa drops 0.31 pct, Mexico IPC down 0.36 pct
    * U.S. fiscal policy and Greece aid weigh on investors
    * China's economy gains traction with improvements

    By Asher Levine and Danielle Assalve
    SAO PAULO, Nov 9 (Reuters) - Latin American stocks fell to
their lowest point in more than two months on Friday, after
positive economic data from China failed to offset concerns over
fiscal problems in the United States and Europe.
    The MSCI Latin American stock index fell 1
percent, with retailers and consumer products makers driving
Brazil's Bovespa index to its third straight loss and
retailer Wal-Mart de Mexico weighing on Mexico's bourse.
    Shares tracked global markets lower with investors focused
on the U.S. "fiscal cliff" -- a combination of government
spending cuts and tax rises to come into effect by law in early
2013 that may cut the federal budget deficit but also tip the
economy back into recession. The issue is one of the toughest
facing President Barack Obama following his re-election on
Tuesday.
    The losses came despite data on Friday showing China's
economy gained traction in October, with a better than expected
improvement in industrial output, fixed asset investment and
retail sales. 
    China is Brazil's No. 1 trading partner and purchaser of
Latin American commodities. 
    "The market is worried ... unsure about the negotiating
conditions that Obama is going to face," said Paulo Veiga, a
director at Mercatto Gestão de Recursos in Rio de Janeiro. "That
is overshadowing everything else right now."
    Fresh concerns that Greece may not immediately secure a deal
to unlock access to urgently needed international aid also added
to risk aversion, driving investors away from emerging market
stocks. 
    Brazil's benchmark Bovespa stock index fell 0.31
percent to 57,343.34 while crossing below its 100-day simple
moving average, a technical support level that has buoyed the
index for two months. 
    Hypermarcas SA, the largest Brazilian producer of
disposable consumer goods, fell 2.4 percent, while retailer Cia
Hering SA slipped 3.5 percent.
    Operating earnings may decline at the companies if the
government moves forward with a plan to unify and redistribute
state value-added taxes on interstate transactions, Bank of
America Merrill Lynch analysts wrote on Friday. 
    Brazil's Braskem SA, Latin America's largest
petrochemical company, slipped 2.6 percent after Chief Executive
Carlos Fadigas said on a Friday conference call that he expects
demand for plastic resins to decline about 8 percent in the
fourth quarter from the prior three months. 
    Brazil's Bovespa has fallen nearly 8 percent since
mid-September, with foreign investors taking 1.23 billion reais
($600 million) out of the market in October.
    "If there is no money coming in, you can have the best news
in the world but the market is going to fall," said Carlos
Manuel Pereira de Sousa, a strategist with Lopes Filho e
Associados in Rio de Janeiro. 
    Sousa pointed to investor discomfort over unpredictable
government intervention in the private sector as a key barrier
to attracting funds from abroad. 
    "Foreign investors are taking their money and putting it in
other emerging markets where they have more stable ground
rules," he said.
    Mexico's IPC index dropped 0.36 percent to 40,682.55.
Heavyweight stocks America Movil and Wal-Mart de
Mexico fell 0.6 percent and 0.9 percent, respectively.
    Shares of cement maker Cemex were little changed
after the company said on Thursday that it was pleased with the
way its U.S. business was evolving but acknowledged it is still
far from fully recovering. 
    Chile's IPSA index slipped for a third straight day
as retailer Falabella fell 0.8 percent and regional
energy group Enersis dropped 0.6 percent.

    Latin America's key stock indexes at 1433 GMT:
    
 Stock indexes                           daily %      YTD %
                          Latest          change     change
 MSCI LatAm                  3,582.36         -1       0.46
                                                  
 Brazil Bovespa             57,343.34      -0.31       1.04
                                                  
 Mexico IPC                 40,682.55      -0.36       9.72
                                                  
 Chile IPSA                  4,234.53      -0.36       1.36
                                                  
 Chile IGPA                 20,720.97      -0.28       2.94
                                                  
 Argentina MerVal            2,395.43      -0.26      -2.73
                                                  
 Colombia IGBC              14,268.98      -0.30      12.66
                                                  
 Peru IGRA                  21,135.90        0.1       8.54
                                                  
 Venezuela IBC             363,575.72          0     210.65
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