October 8, 2019 / 8:30 PM / a month ago

EMERGING MARKETS-Latam markets slip as rising trade worries spur flight to safety

 (New throughout, updates prices)
    By Susan Mathew
    Oct 8 (Reuters) - Most Latin American stocks and currencies
fell on Tuesday as investors dumped risky assets for safer bets
after an escalation of U.S.-China trade tensions, while Brazil's
real rose after a day of sharp losses.
    The dollar lost some momentum, especially against the
safe-haven Japanese yen after Federal Reserve Chairman Jerome
Powell suggested openness to further rate cuts, but still
managed to stay in the black.
    Latam currencies, except Brazil's real, slipped between
0.03% and 0.9% against the greenback after Washington imposed
visa restrictions on Chinese government and Communist Party
officials, further raising hostility between the two
governments. 
    Late on Monday, the Trump administration had widened its
trade blacklist to include some of China's top artificial
intelligence startups, just two days before high-level trade
negotiations were to resume with Beijing.
    "We remain cautious on EMFX," wrote Morgan Stanley analysts
in a note.
    "The headlines around trade talk remain fluid and the market
is unlikely to get much clarity until October 11, and therefore
it is likely to be range-bound for the time being."       
    South China Morning Post reported that China toned down its
expectations from the talks and that the delegation is already
planning to cut short its stay in Washington.  
    Brazil's real ticked 0.3% higher after posting a loss
of more than 1% last session. 
    Mexico's peso and stocks fell despite a U.S.
Democratic lawmaker saying a meeting with Mexican officials
aimed at speeding up ratification of a North American trade deal
was "excellent."
    Shares of retailer Walmart de Mexico was the
worst performer on Mexico's benchmark index after it reported
weaker than expected September sales.
    Other regional stock markets also slipped, with Brazil
shares giving up session gains of as much as 0.8% to
trade 0.7% lower, in line with the gloom in Europe as well as
Wall Street.
    In Argentina, President Mauricio Macri announced a tax
incentive proposal aimed at boosting employment among young
people on Monday, in a bid to gain ground with voters ahead of
general elections later this month.
    Macri's shock loss to main rival Alberto Fernandez in August
resulted in an Argentine market crash as investors feared a
return to populist rules under Fernandez. 
    
    Key Latin American stock indexes and currencies at 1951 GMT:
    Stock indexes             Latest      Daily %
                                          change
 MSCI Emerging Markets          992.59        -0.16
                                        
 MSCI LatAm                    2611.93        -1.42
                                        
 Brazil Bovespa               99888.99        -0.68
                                        
 Mexico IPC                   42626.85        -0.76
                                        
 Chile IPSA                    5041.19        -0.19
                                        
 Argentina MerVal             30386.54       -1.792
                                        
 Colombia IGBC                12882.06        -0.73
                                        
                                                   
       Currencies             Latest      Daily %
                                          change
 Brazil real                    4.0950         0.19
                                        
 Mexico peso                   19.6271        -0.31
                                        
 Chile peso                      724.8        -0.97
                                        
 Colombia peso                 3451.99        -0.12
 Argentina peso                57.8450         0.03
 (interbank)                            
                                        
 
 (Reporting by Susan Mathew in Bengaluru
Editing by Matthew Lewis)
  
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