EMERGING MARKETS-Currencies, stocks edge lower after U.S. data
(Adds Reuters poll; updates with reaction to U.S. data) By Walter Brandimarte and Carolyn Cohn RIO DE JANEIRO/LONDON, Feb 5 (Reuters) - Emerging market stocks and currencies slipped after weaker-than-expected U.S. private-sector jobs data added to fears of a slowdown in the world's largest economy, which could further dampen growth prospects for developing countries. Losses were moderated, however, as many investors preferred to wait for Friday's key U.S. nonfarm payroll data to draw a better picture of the state of the U.S. economy. While some investors find attractive valuations in emerging markets after a recent selloff, others fear that prices could still fall if the Chinese or U.S. economies stumble. "There are still worries about emerging markets and China and now we had some bad U.S. data which raised more concern as the U.S. economy needs to stand on its own," said Luiz Roberto Monteiro, a trader with Renascenca brokerage in Sao Paulo. Latin American stocks tracked by a benchmark MSCI index for the region slid 0.6 percent after data showed U.S. private employers added less jobs than expected in January, as wintry weather kept a lid on hiring. The broader MSCI index for emerging market stocks dropped 0.2 percent, just a few points off a five-month intraday low it hit on Tuesday after plunging 6 percent in the past two weeks. Chinese markets remained closed for holidays. Sentiment toward emerging market currencies remained fragile as many investors bet the dollar would continue to gain as the U.S. Federal Reserve continues to cut back stimulus this year. Among those currencies, the Turkish lira and South African rand look the most vulnerable despite aggressive interest rate hikes by their central banks, a Reuters poll found. The rand dropped 1 percent on Wednesday while the lira traded 0.2 percent lower. The Mexican peso weakened 0.5 percent to 13.39 per dollar, increasing year-to-date losses to 2.7 percent, but far from an 18-month low of 2.6 per dollar it hit on Jan. 24. Brazil's real was little changed, however, as the central bank continued to support the exchange rate by offering investors a hedge against currency losses. POLAND KEEPS RATES UNCHANGED The zloty rose half a percent to a one-week high against the euro following the Polish central bank's expected decision to leave interest rates unchanged at 2.5 percent. Poland sees no need to react to turbulence in emerging markets as a recent slight fall in its exchange rate is only temporary, central bank governor Marek Belka said after the rate decision. The rouble rebounded from a five-year low set on Tuesday after the finance ministry said it would postpone forex purchases of nearly $6 billion to refill one of the country's sovereign wealth funds, which would have pressured the currency. Russian stocks also rebounded from Tuesday's five-month lows. But the Ukrainian hryvnia extended losses to hit a fresh four-year low as political turmoil continued, though the central bank stepped in to support it at 8.7 per dollar. Data on Tuesday showed Ukraine's current account deficit widened sharply last year, to $16 billion. "The (central bank) seems to have finally abandoned its four-year peg ... and will be moving toward greater FX flexibility," analysts at Bank of America-Merrill Lynch said in a client note. "As a result, we hike our FX forecast to 10 per dollar for (end) 2014, which should bring UAH close to its fair value and cut the current account deficit to a more sustainable 3 percent of GDP." Key Latin American stock indexes and currencies at 1610 GMT daily % YTD % Stock indexes Latest change change MSCI LatAm 2,831.63 -0.46 -11.13 Brazil Bovespa 46,462.69 -1.07 -9.79 Mexico IPC 39,907.94 -0.44 -6.60 Chile IPSA 3,397.99 -0.27 -8.14 Chile IGPA 16,982.15 -0.15 -6.83 Argentina MerVal 5,869.07 -4.38 8.87 Colombia IGBC 11,937.51 0.27 -8.67 Peru IGRA 15,078.58 -0.01 -4.29 Venezuela IBC 2,815.58 0.08 2.89 Currencies daily % YTD % Latest change change Brazil real 2.4119 0.09 -2.28 Mexico peso 13.3875 -0.48 -2.67 Chile peso 559.7000 -0.29 -6.00 Colombia peso 2054.0000 -0.90 -5.94 Peru sol 2.8240 -0.04 -1.10 Argentina peso 7.9300 0.98 -18.13 (interbank) Argentina peso 12.4500 0.80 -19.68 (parallel) Turkish lira 2.2435 -0.25 South African rand 11.128 -0.71 Russian rouble 34.903 0.31 (Additional reporting by Natsuko Waki in London and Priscila Jordao in Sao Paulo; Editing by Paul Simao)
DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.