(Updates prices, adds fresh quote, Brazil rate futures)
By Asher Levine
SAO PAULO, April 3 Latin American stocks and
currencies closed lower on Thursday as investors took profits
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 all closed 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. payrolls report,
however, taking the opportunity to pocket recent gains in
expectation of a stronger number. An encouraging number would
help support the case for further tapering of the U.S. Federal
Reserve's monetary stimulus program which has helped support
Latin American 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
Brazilian interest rate futures fell across the
board the day after Brazil's central bank raised its benchmark
interest rate to 11 percent and signaled that it is ready to
halt its tightening cycle if inflation subsides in coming weeks.
Markets had priced in a higher likelihood for an additional
25 basis point hike at the next meeting, Morden added.
Brazil's real slipped 0.5 percent, though it remains
3.4 percent stronger against the U.S. dollar this year.
"The Brazilian real has been remarkably strong since late
January, and the prospects of a sharp depreciation seem
increasingly unlikely," wrote Oxford Economics economist Marcos
Casarin on Thursday. "We believe that a stronger currency can do
much more to tame inflationary pressures than another rate hike
The Mexican peso weakened slightly, while the Chilean
peso slipped 0.7 percent.
Brazil's benchmark Bovespa stock market index fell
0.6 percent and dropped back into slightly negative territory
for the year.
Brazil's market had 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
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 1.0 percent, and lender Banco do Brasil SA
falling 1.6 percent.
Elsewhere in Latin America, Mexico's IPC stock index
capped a five-session rally, retreating from an over 8-month
high reached in the previous session.
Chile's IPSA index posted its biggest drop in nearly
two weeks, driven by a 1.2 percent decline in shares of regional
energy group Endesa
Key Latin American stock indexes and currencies at 2112 GMT:
Stock Latest daily % YTD %
indexes change change
MSCI Emerging Markets 1000.17 -0.48 -0.25
MSCI LatAm 3202.18 -1.22 0.04
Brazil Bovespa 51408.21 -0.57 -0.19
Mexico IPC 40563.06 -0.83 -5.06
Chile IPSA 3793.64 -0.43 2.55
Chile IGPA 18628.12 -0.42 2.20
Argentina MerVal 6498.24 0.89 20.54
Colombia IGBC 14076.1 0.22 7.69
Peru IGRA 14282.55 -0.11 -9.34
Venezuela IBC 2523.19 0 -7.80
Currencies Latest daily % YTD %
Brazil real 2.2788 0.5 3.42
Mexico peso 13.1152 0.04 -0.65
Chile peso 557.1 -0.68 -5.56
Colombia peso 1967.4 0.00 -1.80
Peru sol 2.808 0.00 -0.53
Argentina peso 8.0000 0.03 -18.84
Argentina peso 10.65 1.69 -6.10
(Editing by Clive McKeef)