EMERGING MARKETS-Latam markets drop on profit-taking ahead of U.S. data

Thu Apr 3, 2014 12:48pm EDT

By Asher Levine
    SAO PAULO, April 3 (Reuters) - Latin American stocks and
currencies fell on Thursday as investors took profits in both
after recent rallies, with markets positioning for U.S.
employment data due Friday.
    The MSCI Latin American stock index 
retreated about 1.2 percent after touching its highest level of
the year in the previous session. Chilean, Brazilian and Mexican
stocks were all trading lower.
    Data on Thursday showed a larger-than-expected rise in U.S.
jobless claims in the week ended March 29, though the underlying
trend continued to point to some strength in the labor market.
    Investors remained focused on Friday's U.S. nonfarm payroll
report, however, taking the opportunity to pocket recent gains
in expectation of a stronger number. An encouraging print would
help support the case for further tapering of the U.S. Federal
Reserve's monetary stimulus program, which has helped support
local currencies and stocks. 
    "If that data comes out strong it's going to be risk-off in
the context of a slightly more hawkish interpretation of
tapering," said Siobhan Morden, head of Latin America strategy
at Jefferies in New York. "So I assume it's probably just
profit-taking after what had been some notable gains on foreign
exchange over this past week and a half, ahead of nonfarm
payrolls tomorrow."
    Brazil's real slipped 0.4 percent on Thursday, though
it remains 3.4 percent stronger against the dollar this year.
    The Mexican and Chilean pesos  weakened 0.3
percent and 0.6 percent, respectively.
    Brazil's benchmark Bovespa stock market index fell
slightly the day after it moved back into positive territory for
the year.
    Brazil's market has rallied in recent sessions, driven by an
increase in global risk appetite and a recent poll showing a
decline in the approval rating of President Dilma Rousseff's
government. 
    Many investors have been critical of the current government
for what they say has been its heavy-handed meddling in the
private sector and for policies that run against the interests
of minority shareholders in state-controlled companies, shares
of which soared after the poll.
    Investors took profits on those gains on Thursday, with
shares of state-run Petroleo Brasileiro SA, known as
Petrobras, down 0.5 percent, and lender Banco do Brasil SA
 falling 1.6 percent.
    Elsewhere in Latin America, Mexico's IPC stock index 
and Chile's IPSA index both capped a five-session rally.

    Key Latin American stock indexes and currencies at 1611 GMT:
    
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets           1000.09     -0.49      0.23
                                                    
 MSCI LatAm                      3203.98     -1.17      1.28
                                                    
 Brazil Bovespa                 51455.44     -0.48     -0.10
                                                    
 Mexico IPC                      40750.6     -0.37     -4.63
                                                    
 Chile IPSA                      3782.85     -0.71      2.26
                                                    
 Chile IGPA                     18588.63     -0.63      1.98
                                                    
 Argentina MerVal                6558.11      1.82     21.65
                                                    
 Colombia IGBC                  14090.79      0.32      7.80
                                                    
 Peru IGRA                      14316.14      0.12     -9.12
                                                    
 Venezuela IBC                   2524.28      0.04     -7.76
                                                    
                                                            
 Currencies                                daily %     YTD %
                                            change    change
                                  Latest            
 Brazil real                      2.2785     -0.40      3.44
                                                    
 Mexico peso                      13.127     -0.29     -0.74
                                                    
 Chile peso                        556.4     -0.56     -5.45
                                                    
 Colombia peso                    1961.7      0.12     -1.51
 Peru sol                          2.808      0.00     -0.53
                                                    
 Argentina peso (interbank)       8.0025      0.00    -18.87
                                                    
 Argentina peso (parallel)         10.74      0.56     -6.89
                                                    
 
 (Editing by Peter Galloway)