EMERGING MARKETS-Brazil, Mexico stocks fall on U.S. debt deadlock
* Brazil benchmark Bovespa down 0.44, near one-month low * Mexico IPC drops 0.75 as U.S. default concerns mount By Priscila Jordão SAO PAULO, Oct 8 (Reuters) - Brazilian and Mexican stocks fell on Tuesday as stalled talks in Washington to avoid a U.S. debt default weighed on global markets. Brazil's benchmark stock index slipped 0.44 percent but good news for a handful of companies held the index back from a one-month low. Mexico's IPC stock index fell 0.75 percent, while Chile's bourse lost 0.11 percent. A political standoff in Washington entered its second week on Tuesday, as Republican congressional leaders insisted on negotiations to cut the nation's fiscal deficit as a condition for raising the federal debt limit. The U.S. Treasury expects to exhaust all of its remaining borrowing capacity under the current $16.7 trillion cap by Oct. 17. If the U.S. government defaults on debt because it lacks further borrowing authority, the results could be "devastating" for the world economy, Olivier Blanchard, the IMF's chief economist, said on Tuesday. On the Sao Paulo stock market, shares of Brazilian telecom Grupo Oi SA rose 4.6 percent after the company assured investors late on Monday that its merger with Portugal Telecom SGPS SA would not dilute the Oi shareholders. Wood pulp producers Fibria Celulose SA and Suzano Papel e Celulose SA gained 2.8 percent and 2.0 percent respectively after Goldman Sachs Group analysts raised their recommendation on the stocks from "neutral" to "buy". In Mexico, mining and infrastructure company Grupo Mexico and billionaire Carlos Slim's telecommunications giant America Movil both lost over 1 percent, among the biggest decliners on the IPC index. Latin America's key stock indexes at 1448 GMT: Stock indexes daily % YTD % Latest change change MSCI LatAm 3,338.56 -0.36 -11.77 Brazil Bovespa 52,184.26 -0.44 -14.38 Mexico IPC 40,146.80 -0.75 -8.14 Chile IPSA 3,808.70 -0.11 -11.45 Chile IGPA 18,765.03 -0.09 -10.94 Argentina MerVal 4,957.30 0.67 73.68 Colombia IGBC 14,143.16 0.51 11.66 Peru IGRA 15,551.31 0.13 -24.62 Venezuela IBC 1,757,781.35 0.19 272.86
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