EMERGING MARKETS-Latam currencies drop on profit taking

Mon Feb 4, 2013 12:46pm EST

* Disappointing US data, European jitters trigger
profit-taking
    * Mexico peso down 0.8 pct in overseas trading, erases
Friday's rally
    * Brazilian real little changed for 4th consecutive session

    By Walter Brandimarte
    RIO DE JANEIRO, Feb 4 (Reuters) - Latin American currencies
weakened on Monday as a combination of disappointing U.S.
factory data and brewing political worries in Europe encouraged
investors to pocket recent gains in emerging markets and other
risky asset classes.
    The Mexican peso, the most liquid Latin American
currency, lost 0.8 percent in overseas trading as Mexican
markets were closed for a holiday.
    Despite its losses, the peso remained nearly 1.5 percent
stronger year-to-date after rallying 0.8 percent on Friday on
the back of strong manufacturing data in the United States,
Mexico's main trading partner.
    Investors are also watching the results of a government
probe to find out whether an explosion on Thursday that killed
33 people at the headquarters of Pemex was an attack or an
accident. The peso could suffer if the investigation shows the
state-run oil monopoly was the target of an attack, analysts
said. 
    Losses in the peso and in other Latin American currencies
were mostly a result of a more cautious global environment after
U.S. data showed factory orders rose less than expected in
December, a possible sign that companies were losing confidence
in the strength of the world's largest economy. 
    Global aversion to risk was also fueled by rising political
jitters in Europe, including a corruption scandal in Spain and
polls showing Italian former Prime Minister Silvio Berlusconi
gaining ground ahead of elections this month.
    The Chilean peso lost 0.3 percent while the
Colombian peso was 0.7 percent weaker. 
    "European markets are down on concerns about Spain and U.S.
markets are suffering by some weaker-than-expected quarterly
results. All of that is weighing on the (Chilean) peso," said
Eugenio Cortes, head of forward trading at EuroAmerica.
    The Brazilian real  was little changed for the
fourth consecutive session, however, hovering around the level
of 1.99 per dollar. 
    Investors took the latest Brazilian central bank
interventions in the foreign exchange market as a sign that
policymakers want the currency to remain around the mark of 2
per dollar in order to avoid additional inflationary pressures. 
      
    
    Latin American FX prices at 1730 GMT:
    
 Currencies                         daily %    YTD %
                                     change   change
                            Latest           
 Brazil real                1.9913    -0.19     2.44
                                             
 Mexico peso               12.7091    -0.84     1.22
                                             
 Chile peso               472.9000    -0.34     1.23
                                             
 Colombia peso           1787.4400    -0.63    -1.20
                                             
 Peru sol                   2.5750     0.04    -0.93
                                             
 Argentina peso             4.9800     0.15    -1.36

 Argentina peso             7.7000     2.86   -11.95
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