EMERGING MARKETS-Latam currencies, stocks weaken on Russia concerns

Thu Aug 7, 2014 1:01pm EDT

SAO PAULO, Aug 7 (Reuters) - Latin American currencies and
stocks weakened on Thursday as increasing geopolitical tension
in Eastern Europe drove investors toward safe-haven assets such
as the U.S. dollar.
    Russia said on Wednesday it would ban all food imports from
the United States and all fruit and vegetables from Europe in a
stronger-than-expected answer to Western sanctions for Moscow's
support for separatists in Ukraine. 
    The move led to a drop in risk appetite, further fueling a
general investor retreat from emerging markets.
    Brazil's currency, the real, weakened past 2.29 per
dollar in afternoon trading. Some traders see the central bank
shifting the goalposts for its informal trading band, which it
defends through market interventions, to 2.25 - 2.30 reais per
dollar from  a current range of 2.20-2.25. 
    Central bank director Carlos Hamilton Araujo said on
Thursday that he expects inflation to ease even if the real
depreciates further.
    "The situation abroad is complicated, we have elections
here, and historically we've seen higher demand for dollars in
the second half of the year," said Reginaldo Siaca, head of
currency trading for Sao Paulo's Advanced Corretora.
    The outlook for October's presidential elections drove
volatility in Brazil's stock market as investors positioned for
the expected release of an electoral poll later in the day. Many
investors see a defeat of President Dilma Rousseff as a
potential boon to state-run companies such as oil producer
Petroleo Brasileiro SA, known as Petrobras.
    Petrobras preferred shares snapped a three-day rally,
falling nearly 2 percent.
    In Mexico, both the peso and the benchmark IPC stock
index lost about 0.3 percent after data showed inflation in the
12 months through July rose to a five-month high.
 
    Peru's central bank is expected to cut interest rates by 25
basis points later on Thursday as it looks to counter sluggish
economic growth. The Peruvian nuevo sol edged lower.
    
    Key Latin American stock indexes and currencies at 1634 GMT:
    
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets           1049.67     -0.67      5.39
                                                    
 MSCI LatAm                      3393.83     -0.96      7.06
                                                    
 Brazil Bovespa                 56040.82     -0.79      8.80
                                                    
 Mexico IPC                     44292.04      -0.3      3.66
                                                    
 Chile IPSA                      3917.16     -0.16      5.89
                                                    
 Chile IGPA                     19107.61     -0.13      4.83
                                                    
 Argentina MerVal               8238.989      1.31     52.83
                                                    
 Colombia IGBC                  14204.86      -0.4      8.67
                                                    
 Peru IGRA                         16945      0.28      7.56
                                                    
 Venezuela IBC                   2148.55     -1.69    -21.49
                                                    
                                                            
 Currencies                                daily %     YTD %
                                            change    change
                                  Latest            
 Brazil real                      2.2913     -0.79      2.86
                                                    
 Mexico peso                     13.2877     -0.36     -1.94
                                                    
 Chile peso                        577.6     -0.09     -8.92
                                                    
 Colombia peso                    1884.1      0.09      2.54
 Peru sol                          2.811     -0.11     -0.64
                                                    
 Argentina peso (interbank)       8.2700      0.00    -21.49
                                                    
 Argentina peso (parallel)         12.75      0.39    -21.57
                                                    
 

 (Reporting by Bruno Federowski; Writing by Asher Levine;
editing by Andrew Hay)
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