EMERGING MARKETS-Latam currencies weaken on Fed's Yellen comments

Tue Jul 15, 2014 12:48pm EDT

SAO PAULO, July 15 (Reuters) - Latin American currencies
weakened on Tuesday after comments from Federal Reserve Chair
Janet Yellen stoked investors' expectations that U.S. interest
rates are set to rise sooner rather than later.
    The region's equity markets were little changed, with the
MSCI Latin American stock index down 0.5
percent.
    Most of Latin America's currencies started the day in
slightly weaker territory following retail and manufacturing
data from the United States that showed the world's largest
economy is gaining steam. 
    Regional currencies accelerated losses later in the session
on Tuesday after Yellen made comments to a Senate committee that
many investors viewed as slightly hawkish, or more likely to
favor higher U.S. interest rates. In particular, she suggested
that should the labor market continue to improve at its current
pace, interest rates could rise more quickly than currently
expected.
    "The question is whether this is just a door opener to the
possibility that the economy may be improving or whether it is a
warning flare that the Fed sees the economy as stronger than
anticipated," Citi strategist Steven Englander wrote in a client
note. "The market is correct in seeing glimmers of hawkishness
relative to the past and the absence of any new dovish
surprises."
    Brazil's real  posted its biggest one-day drop
against the dollar in nearly two weeks, while Colombia's peso
 fell for the third straight session.
    Chile's peso weakened its most in nearly a month as
the country's central bank prepared to announce its benchmark
interest-rate decision later in the day.
    In a Reuters poll, 10 analysts predicted the bank will
maintain the rate at 4.0 percent, while six said it
will likely be reduced by 25 basis points. Over half of the 56
analysts in a central bank poll published on Thursday predicted
a cut. 
    In equity markets, Brazil's Bovespa index was nearly
unchanged, though shares of meatpacker Marfrig Global Foods SA
 jumped 7.5 percent after Merrill Lynch analysts
raised their recommendation on the shares to "buy" from
"neutral."
    Mexican and Chilean stock markets were also
little changed. 
    
    Key Latin American stock indexes and currencies at 1610 GMT:
    
 Stock indexes:               Latest       Daily   YTD pct
                                             pct    change
                                          change  
 MSCI Emerging Markets         1,065.64     0.19      6.08
                                                  
 MSCI LatAm                    3,463.83    -0.48      8.73
                                                  
 Brazil Bovespa               55,716.27    -0.05      8.17
 Mexico IPC                   43,878.05     -0.2      2.69
 Chile IPSA                    3,964.58    -0.01      7.17
 Chile IGPA                   19,291.36    -0.01      5.84
 Argentina MerVal             8,701.859    -1.56     61.41
                                                  
 Colombia IGBC                13,699.91    -0.96      4.81
 Peru IGRA                    17,013.98    -0.31      8.00
 Venezuela IBC                  2,103.4        0    -23.14
                                                          
 Currencies:                               Daily   YTD pct
                                             pct    change
                                 Latest   change  
 Brazil real                     2.2242    -0.64      5.96
 Mexico peso                    12.9675    -0.10      0.48
 Chile peso                         557    -0.63     -5.55
 Colombia peso                 1,869.65    -0.51      3.33
 Peru sol                         2.784    -0.11      0.32
 Argentina peso (interbank)      8.1500     0.03    -20.34
                                                  
 Argentina peso (parallel)        12.15    -0.82    -17.70
                                                  
 
 (Reporting by Asher Levine, editing by G Crosse)
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