June 1, 2018 / 4:00 PM / 17 days ago

EMERGING MARKETS-Brazil stocks, currency fall after Petrobras CEO resigns

    By Bruno Federowski
    BRASILIA, June 1 (Reuters) - Brazilian financial markets
dropped on Friday after the chief executive officer of Petroleo
Brasileiro SA resigned, driving shares in the
state-controlled oil company sharply downward to their biggest
one-day loss in a year.
    Pedro Parente, the outgoing CEO of Petrobras, as the oil
company is known, quit on Friday after a paralyzing nationwide
truckers' strike forced the government to lower diesel prices.

    The move fueled concerns that the government could once
again meddle with the scandal-plagued company's pricing policy,
a practice that had boosted Petrobras' debt which Parente had
helped to stave off.
    "It's clear that the government does not want to undercut
Petrobras, but it's become more and more likely that it will run
out of options," said a partner at a São Paulo-based portfolio
manager, who cut his exposure to Petrobras shares by half in the
wake of Parente's resignation.
    Petrobras preferred shares were last down about
19.6 percent, extending a selloff on Friday that has seen it
shed nearly 40 percent of its value since the beginning of the
truckers' strike on May 21. The company's common shares
 were down 18 percent to a five-month low. 
    Common shares in meatpacker BRF SA, whose board
is chaired by Parente, rose 8 percent, the biggest gainer on the
benchmark Bovespa stock index, which fell 0.7 percent. 
    Outflows from Brazilian stocks and concerns over political
instability drove the Brazilian real to weaken by nearly
1 percent, by far the biggest loser among Latin America's mostly
rangebound currencies.
    Demand for emerging market currencies has wavered in recent
months as data showing accelerating inflation and concerns over
a widening fiscal deficit in the United States bumped up U.S.
bond yields.
    Earlier on Friday, the U.S. Labor Department reported that
U.S. job growth accelerated and the unemployment rate dropped to
an 18-year low, pointing to rapidly tightening labor market
conditions.
    
    Key Latin American stock indexes and currencies at 1535 GMT:
 Stock indexes                 Latest        Daily     YTD
                                               pct     pct
                                            change  change
 MSCI Emerging Markets           1,129.36     0.77   -3.26
                                                    
 MSCI LatAm                      2,537.20    -0.91   -9.46
                                                    
 Brazil Bovespa                 75,717.12    -1.35   -0.90
 Mexico IPC                     44,975.61      0.7   -8.87
 Chile IPSA                      5,468.05     0.24   -1.74
                                                    
 Chile IGPA                     27,691.36     0.24   -1.03
 Argentina MerVal               28,299.92    -0.91   -5.87
                                                    
 Colombia IGBC                  12,352.81     0.45    8.64
                                                    
                                                          
 Currencies                                  Daily     YTD
                                               pct     pct
                                   Latest   change  change
 Brazil real                       3.7581    -0.92  -11.84
 Mexico peso                      19.8590     0.24   -0.81
 Chile peso                         632.7    -0.16   -2.85
 Colombia peso                   2,866.63     0.80    4.02
 Peru sol                           3.273    -0.06   -1.10
 Argentina peso (interbank)       24.9500     0.08  -25.45
                                                    
 Argentina peso (parallel)           25.9     0.27  -25.75
                                                    
 
 (Reporting by Bruno Federowski, editing by G Crosse)
  
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