EMERGING MARKETS-U.S. data boosts risk appetite; Russian assets fall

Thu Mar 6, 2014 4:21pm EST

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(Recasts; adds late market action in Latin America; changes
dateline)
    By Walter Brandimarte and Carolyn Cohn
    RIO DE JANEIRO/LONDON, March 6 (Reuters) - Emerging market
currencies and stocks traded mostly higher on Thursday after
upbeat U.S. labor market data, but Ukrainian and Russian assets
fell after Crimea's parliament voted to join Russia, triggering
potential U.S. sanctions.
    MSCI's benchmark index of emerging market stocks 
gained 1.1 percent while the Latin American portion of the index
 jumped nearly 2 percent after data showed weekly
applications for U.S. unemployment benefits fell to their lowest
in three months. 
    "Markets continued in risk-on mode," BullTick Capital
Markets said in a research note, adding that the U.S. jobless
claims data possibly increased "hopes for a positive rather than
negative surprise in tomorrow's non-farm number."
    U.S. nonfarm payrolls are forecast to have increased by
149,000 jobs in February, according to the latest Reuters survey
of economists. The data has great potential impact on emerging
markets as it may determine the pace of withdrawal of U.S.
central bank's monetary stimulus.
    Key emerging market currencies also strengthened during New
York trading hours, with the Turkish lira jumping 1
percent, the Mexican peso climbing 0.6 percent and the
Chilean peso gaining 0.7 percent.
    Russia and Ukraine assets took a hit, however, after
Crimea's Moscow-backed government said a referendum on the
region's status would take place on March 16, in a dramatic
escalation of the crisis over the Ukrainian Black Sea peninsula.
 
    European Union leaders are holding an emergency summit on
Thursday to seek ways to pressure Russia to back down and accept
mediation. 
    "Markets are still very sensitive to Russia/Ukraine-related
headlines," said Luis Costa, emerging markets strategist at
Citi, in a client note. "It looks pretty clear to me the
referendum's outcome will be a glaring 'yes' to join Russia."
    An executive order from President Barack Obama allows the
United States to sanction those most directly involved in
destabilizing Ukraine, including Crimea, the White House said.
    Ratings agency Moody's Investors Service said the
Russia-Ukraine situation was credit-negative for Russia and the
possibility of sanctions could damage exports and growth.
 
    "Any secondary effect (on Russia) of the escalation in
tensions will be financial," said Joseph Dayan, managing
director of brokerage BCS Financial Group. "Sanctions are the
key concern."
    Ukraine and state energy firm Naftogaz' dollar bonds due
later this year  fell sharply
after the country's finance minister said on Wednesday that
Ukraine could start talks with creditors on restructuring
foreign currency debt. But a Ukraine Finance Ministry official
told bankers on Thursday that the government intended to honor
its foreign and domestic debt obligations. 
    Russian stocks  fell about 1 percent and the
ruble weakened 0.3 percent against the dollar.
    
    Key Latin American stock indexes and currencies at 2054 GMT:
    
     Stock indexes    Latest     Daily pct   YTD pct
                                 change      change
 MSCI Emerging       969.69      1.1         -4.34
 Markets                                     
 MSCI LatAm          2,975.9     1.72        -8.6
                                             
 Brazil Bovespa      47,093.13   1.08        -8.57
                                             
 Mexico IPC          39,179.34   0.41        -8.30
                                             
 Chile IPSA          3,730.39    0.39        0.84
                                             
 Chile IGPA          18,399.37   0.33        0.95
                                             
 Argentina MerVal    5,909       2.76        9.61
                                             
 Colombia IGBC       12,915.99   1.43        -1.19
                                             
 Peru IGRA           15,299.38   0.76        -2.88
                                             
 Venezuela IBC       2,767.95    0.88        1.15
                                             
                                             
 Currencies                      Daily pct   YTD pct
                                 change      change
                     Latest                  
 Brazil real         2.3200      -0.06       1.59
                                             
 Mexico peso         13.1563     0.60        -0.96
                                             
 Chile peso          558.5       0.73        -5.80
                                             
 Colombia peso       2,028.38    0.52        -4.75
                                             
 Peru sol            2.805       0.00        -0.43
                                             
 Argentina peso      7.8700      0.16        -17.50
 (interbank)                                 
                                             
 Argentina peso      10.95       -3.65       -8.68
 (parallel)                                  
                                             
    
 <--------------------------------------------------------------
    GRAPHIC on emerging market FX performance 2014:
    link.reuters.com/jus35t
    GRAPHIC on MSCI emerging index performance 2014: 
    link.reuters.com/weh36s
    GRAPHIC on MSCI emerging Europe performance 2014: 
    link.reuters.com/jun28s
    GRAPHIC on MSCI frontier index performance 2014: 
    link.reuters.com/zyh97s
    CENTRAL EUROPE market report: 
    TURKISH market report: 
    RUSSIAN market report: 
 -------------------------------------------------------------->

 (Additional reporting by Natsuko Waki in London; editing by G
Crosse)
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