December 21, 2012 / 10:36 PM / 5 years ago

EMERGING MARKETS-Latam stocks fall after 'fiscal cliff' setback

* U.S. budget talks falter after House vote
    * Commodities shares weigh on Brazil, Mexico bourses
    * Brazil Bovespa drops 0.44 pct, Mexico IPC flat

    By Asher Levine and Danielle Assalve
    SAO PAULO, Dec 21 (Reuters) - Latin American stocks fell on
Friday, as a new setback in U.S. budget negotiations weighed on
risk appetite and investors sold off commodities shares
following recent gains. 
    Shares tracked global markets lower after Republican
lawmakers in the U.S. House of Representatives failed to back a
plan by House Speaker John Boehner to extract concessions from
President Barack Obama in year-end "fiscal cliff" talks.
    The 'cliff' refers to $600 billion in tax hikes and spending
cuts due to take effect in the new year which, many analysts
agree, could tip the nation into recession. In vestors had
expressed optimism in recent days that progress was being made,
but the latest setback sent jitters through Latin American
    " The problem is that the market ha d created a positive
expectation in recent days that negotiations were progressing
and that they would reach an agreement before the end of the
year, but now it seems increasingly difficult," said economist
Silvio Campos of Tendencias Consultoria in Sao Paulo, wh o
nonetheless thought U.S. politicians would reach a compromise.
    Brazil's benchmark Bovespa stock index snapped a
three-day rally, falling 0 .44 percent to 6 1 , 0 07. 0 3 a s shares of
the most widely traded commodities firms weighed. Th e index was
up 2.35 percent for the week, its biggest weekly gain in a
    Preferred shares of iron-ore mining giant Vale SA 
fell 0 .76 percent, while state-controlled oil producer Petroleo
Brasileiro SA, known as Petrobras, slipped 1. 71 
pe rcent, contributing most to the index's losses.
    Vale said it would take a $4.2 billion writedown on its
nickel and aluminum assets, according to a securities filing
late Thursday. 
    Bank of America Merrill Lynch analysts said on Friday that
the move should have a very limited impact on the company's
stock, because it was already expected, it is cash-flow neutral
and the company could potentially have a tax benefit on the
    Shares of electric utility Companhia Energetica de Minas
Gerais SA rose 6 .05 percent after the company said
that it would pay 1.6 billion reais ($770 million) in dividends
to shareholders.
    Mexico's IPC index lost was flat at 43, 621 . 62, but
was up 1.33 percent for the week. 
    Shares of conglomerate Alfa dropped 3.35 percent.
    Chile's IPSA index ended the day - and the week -
flat closing at 4,293.78. 

    Latin America's key stock indexes at 2148 GMT:
 Stock indexes                                       % change
 MSCI LatAm                          3,800.82           -0.62
 Brazil Bovespa                     61,007.03           -0.44
 Mexico IPC                         43,621.62           -0.04
 Chile IPSA                          4,293.78            0.05
 Chile IGPA                         21,002.39            0.09
 Argentina MerVal                    2,786.40           -2.57
 Colombia IGBC                      14,544.55           -0.15
 Peru IGRA                          20,338.87           -0.06
 Venezuela IBC                     465,396.13            0.01

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