EMERGING MARKETS-Latam stocks fall after 'fiscal cliff' setback

Fri Dec 21, 2012 10:21am EST

Related Topics

* U.S. budget talks falter after House vote
    * Commodities shares weigh on Brazil, Mexico bourses
    * Brazil Bovespa drops 1.29 pct, Mexico IPC down 0.48 pct

    By Asher Levine
    SAO PAULO, Dec 21 (Reuters) - Latin American stocks fell the
most in over a month on Friday, as a new setback in U.S. budget
negotiations weighed on risk appetite and investors sold off
commodities shares following recent gains. 
    The MSCI Latin American stock index fell
1.38 percent to 3,772.03, its first loss in four sessions. 
    Shares tracked global markets lower after Republican
lawmakers in the U.S. House of Representatives failed to back a
plan by House Speaker John Boehner to extract concessions from
President Barack Obama in year-end "fiscal cliff" talks.
 The 'cliff' refers to $600 billion in tax hikes
and spending cuts due to take effect in the new year which, many
analysts agree, could tip the nation into recession.
    "It's totally about the fiscal cliff today, the fact that we
are getting to the end of the year without an expectation for an
accord," said Gustavo Mendonça, an economist with Saga Capital
in Rio de Janeiro. 
    Brazil's benchmark Bovespa stock index snapped a
three-day rally, falling 1.29 percent to 60,486.79 as shares of
the most widely traded commodities firms weighed.
    Preferred shares of iron-ore mining giant Vale SA 
fell 1.81 percent, contributing most to the index's losses,
while state-controlled oil producer Petroleo Brasileiro SA
, known as Petrobras, slipped 2.42 percent.
    "(Commodity stocks) rose a lot recently so there is some fat
to burn," Mendonca added. "Vale in particular rose a lot this
month so ... it's natural, with the foreign outlook worsening,
we'll see the stock returning more."
    Vale said it would take a $4.2 billion writedown on its
nickel and aluminum assets, according to a securities filing
late Thursday. 
    Bank of America Merrill Lynch analysts said on Friday that
the move should have a very limited impact on the company's
stock, because it was already expected, it is cash-flow neutral
and the company could potentially have a tax benefit on the
charge. 
    Shares of electric utility Companhia Energetica de Minas
Gerais SA rose 5.8 percent after the company said
that it would pay 1.6 billion reais ($770 million) in dividends
to shareholders.
    Mexico's IPC index fell its most in three weeks,
losing 0.48 percent to 43,430.36.
    Mining firm Grupo Mexico fell 0.5 percent,
while shares of conglomerate Alfa dropped 1.83
percent.
    Chile's IPSA index snapped a five-day rally to post
its biggest daily loss in a month, falling 0.64 percent to
4,264.03. 
    Shares of LATAM Airlines Group, Latin America's
largest carrier, fell 1.4 percent after the company said on
Thursday it plans to raise $172.3 million by selling the
remainder of a recent capital increase. 

    Latin America's key stock indexes at 1434 GMT:
 Stock indexes                           daily %      YTD %
                          Latest          change     change
 MSCI LatAm                  3,772.03      -1.38       6.17
                                                  
 Brazil Bovespa             60,486.79      -1.29       6.58
                                                  
 Mexico IPC                 43,430.36      -0.48      17.13
                                                  
 Chile IPSA                  4,264.03      -0.64       2.07
                                                  
 Chile IGPA                 20,883.28      -0.48       3.74
                                                  
 Argentina MerVal            2,796.89       -2.2      13.57
                                                  
 Colombia IGBC              14,452.97      -0.78      14.11
                                                  
 Peru IGRA                  20,336.39      -0.07       4.43
                                                  
 Venezuela IBC             465,342.84          0     297.61
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