November 27, 2017 / 10:56 PM / a year ago

EMERGING MARKETS-Brazil stocks fall on pension reform jitters

 (Adds final prices, Mexico, Chile)
    By Bruno Federowski
    SAO PAULO, Nov 27 (Reuters) - Brazilian stocks fell on
Monday as traders feared the government might have to weaken
pension legislation further to ensure its approval in Congress.
    President Michel Temer's administration agreed last week to
soften its controversial plan to streamline the social security
system after facing strong opposition from lawmakers.
    That proposal would generate fiscal savings of about 60
percent of the government's original proposal, down from 75
percent under a previous version.
    Investors widely see the bill as necessary to curtail rising
public debt and to allow the government to meet fiscal targets. 
    Temer's allies in Congress have acknowledged that the plan
might be watered down again to guarantee its approval in the
lower house this year.
    In a report, analysts at Magliano Corretora brokerage said
they expected stock market volatility to spike until the pension
reform plan goes to a vote in early December.
    The benchmark Bovespa index fell 0.13 percent on
Monday, dragged down by blue-chips such as miner Vale SA
 and lenders Banco Bradesco SA and Banco do
Brasil SA. State-controlled oil company Petróleo
Brasileiro SA tracked crude prices lower.
    Shares of phone carrier Oi SA, which
are not part of the benchmark index, fell after news of Chief
Executive Officer Marco Schroeder's resignation.
    In a client note, Credit Suisse said the move should make it
harder to find a restructuring plan to please all shareholders,
heightening the chances of a government intervention as Oi
struggles to emerge from bankruptcy protection.
    The Brazilian real firmed 0.4 percent while Mexico's
peso seesawed. Traders moved on growing doubts about
the U.S. government's ability to implement a tax overhaul which
buffeted the greenback globally.
    Investors had earlier cheered news that Mexico's finance
minister Jose Antonio Meade would seek the presidency after
resigning on Monday.
    Officials say his reputation for honesty and cross-party
appeal will be vital if he hopes to defeat former Mexico City
Mayor Andres Manuel Lopez Obrador in the July 2018 presidential
    Left-leaning Lopez Obrador, who has captained a populist
platform that investors fear could stir tensions with the U.S.
government, has been leading polls for the election, which could
be the most competitive in decades.
    Dragged down by falling copper prices, Chile's peso
fell 0.64 percent to its lowest level against the dollar in
almost a month.
    Key Latin American stock indexes and currencies at 2240 GMT:
 Stock indexes                              daily %   YTD %
                                             change  change
 MSCI Emerging Markets             1144.33    -0.86   32.71
 MSCI LatAm                        2807.28    -0.38   19.94
 Brazil Bovespa                   74058.92    -0.13   22.97
 Chile IPSA                        5032.53    -0.16   21.23
 Chile IGPA                       25337.51    -0.12   22.20
 Venezuela IBC                      798.87    12.19  -97.48
 Currencies                                 daily %   YTD %
                                             change  change
 Brazil real                        3.2277     0.15    0.67
 Mexico peso                         18.59    -0.13   11.59
 Chile peso                          638.1    -0.64    5.11
 Colombia peso                        3005    -0.74   -0.12
 Peru sol                            3.236     0.03    5.50
 Argentina peso (interbank)          17.31     0.20   -8.29
 Argentina peso (parallel)           18.06    -0.22   -6.87
 (Reporting by Bruno Federowski; Editing by Lisa Von Ahn and Tom
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