EMERGING MARKETS-LatAm assets mixed in thin volume
NEW YORK, Nov 17 (Reuters) - Latin American assets were mixed in volatile trade on Monday following global markets while investors continued to demand higher returns for holding risky emerging markets bonds, stocks and currencies.
Leaders representing the Group of 20 major industrialized and developing nations met over the weekend and decided to take some steps to tackle the world economy but left it to individual governments to tailor their response to their own troubled markets, bursting any investor hopes of drastic action.
"The weekend G20 meeting in Washington suggested that there will be more fiscal and monetary easing to come, but there was little in the way of immediate market moving implications," said Nick Chamie, head of emerging markets research at RBC Dominion Securities.
Markets traded weaker in thin volume, with overall spreads, the premium that investors demand for holding riskier security than U.S. Treasuries, widened 2 basis points to 672 basis points, shedding 1.88 percent of total returns on the day.
Latin American stocks eased 0.71 percent .MILA00000PUS while Morgan Stanley Capital International's emerging markets stock index .MSCIEF fell 1.56 percent.
Brazil's Bovespa index .BVSP was the only major exchange in positive territory trading 0.33 percent higher while Argentina's MerVal index .MERV dropped 3.04 percent. Chile's blue-chip stocks .IPSA traded down 0.76 percent while Chile's all-market IGPA index .IGPA shed 0.54 percent.
Mexican and Colombian markets were closed on Monday for public holiday.
Currencies in the region were mixed as global recession fears deepened with the Brazilian real (BRBY) trading weaker against the U.S. dollar at 2.2810. Brazil's intervention in the foreign exchange market since Sept. 19 have totaled $46 billion.
Chile's peso CLP=CLCLP= closed 1.47 percent weaker to 645.00/645.50 per dollar following a drop in global markets and a weakness in the price of copper, Chile's main export.
In informal trade between foreign-exchange houses, as tracked by Reuters, Argentina's peso was slightly higher at 3.357/3.362 per U.S. dollar ARSB=. In formal trade between banks ARS=RASL, where the central bank intervenes directly, the peso was slightly lower at 3.315/3.317 per dollar.
ECUADOR'S FEARS
Ecuador's global bonds were trading at default levels yet its global bond due in 2012 ECUGLB12=RR gained back 10.00 percentage points to bid 24.00 in price and to yield 93.341 percent.
Ecuador's Finance Minister Elsa Viteri said on Friday the government will use a 30-day grace period to decide whether to pay a $30.6 million coupon due Nov. 15 on its 2012 global bonds. The 2012 bond on Friday dropped to trade at 14.00 cents on the dollar after the news.
Bond prices are now uniform in qualifying this credit as a defaulted sovereign with recovery values in the $15 to $20 range, analysts said.
Only two months ago, the bonds were bid at more than 90 cents to the dollar. They have been declining steadily during the past few weeks as the global credit crisis and a sharp fall in oil prices clouded the outlook for emerging economies.
The minister explained that in order to decide if the payment would be made, the government would analyze the results of a broad debt audit report to be delivered on Nov. 20.
Viteri said the government could consider suspending payments on some bilateral and multilateral debt and has not ruled out talks with bondholders on restructuring debt.
She also said Ecuador could seek credit from allied nations, including Venezuela, if needed to help finance next year's budget as oil prices slide.
"While we do not rule out the possibility that Venezuela's President Chavez might provide external assistance of some form, in our view President Chavez will be busy thinking about the fiscal adjustment that his country needs, rather than involved in complicated financial strategies involving Ecuador," Alejandro Grisanti at Barclays Capital said in a note.
"We did not expect this movement at this very early stage, but as we commented yesterday, politics and ideology weigh heavily in (Ecuadorean President Rafael) Correa's decision," he said. (Editing by Kenneth Barry)
