* Chilean central bank slashes interest rates to 1% * U.S. Fed's emergency rate cut spooks markets * Brazil unveils economic measures to support economy * UBS calls for immediate 100 bps cut by Brazil central bank * LATAM Airlines Group to cancel 90% of international flights (Adds comments, updates prices) By Shreyashi Sanyal March 16 (Reuters) - Markets pummeled currencies in Latin America on Monday as the U.S. Federal Reserve and the Chilean central bank's moves to slash interest rates did little to ease worries about the impact of the coronavirus pandemic on the global economy. The Mexican peso sank as much as 5.2%, hitting new lows as oil prices tumbled, while Brazil's real fell 2.6%. Regional stocks also slumped, in line with global markets. Brazil shares gave up as much as 14.3%, while those in Chile, Argentina and Colombia lost between 8% and 12.7%. The Fed cut interest rates by 100 basis points to near zero and pledged to expand its balance sheet by at least $700 billion in the coming weeks. "Lowering borrowing costs probably won't make a big difference until we move toward recovery and business investment starts to pick up," said Burt White, chief investment officer at LPL Financial. Chile's central bank said it would cut its interest rate to 1% from 1.75%. The rate is the lowest in almost a decade, last reaching 1% in June 2010. "Although today's statement didn't say that further cuts are on the cards, we find it likely that more easing will follow, taking the policy rate back to around 0.5%," said William Jackson, chief emerging markets economist at Capital Economics. As oil prices slid, with Brent falling 10% and U.S. crude to below $30, investors worried about the impact of the slide on Mexican state-run oil firm Pemex. With debt of more than $100 billion, Pemex is Latam's most indebted company and reported one of its worst-ever losses last year. After rating agency Fitch downgraded the company's bonds to junk last year, it faces the threat of similar action from S&P and Moody's, which would spark an exodus from Pemex bonds by funds that are mandated to hold investment-grade bonds. Mexican stocks were shut for a local holiday. Brazil's real hovered near record lows. The government on Monday approved a raft of measures to combat the economic and financial damage from the coronavirus, boosting liquidity in the financial system, maintaining the flow of credit in the economy and expanding banks' lending capacity. Economists at Swiss investment bank UBS on Monday called for an "immediate" 100 basis-point cut in Brazil's benchmark Selic interest rate, to 3.25%. A central bank survey showed the outlook for Brazil's economy deteriorated sharply. Sao Paulo's Bovespa index triggered a circuit break after it fell 10% and went on to steeper losses after it restarted. LATAM Airlines Group tumbled 24% as the continent's largest carrier canceled 90% of its international flights as demand collapsed and countries shut down borders due to the coronavirus outbreak. Key Latin American stock indexes and currencies at 1843 GMT: Stock Latest Daily % change indexes MSCI Emerging Markets 833.97 -6.42 MSCI LatAm 1641.38 -13 Brazil Bovespa 72048.4 -12.86 2 Mexico IPC 38085.0 3.95 5 Chile IPSA 3292.89 -12.51 Argentina MerVal 25911.7 -8.915 9 Colombia COLCAP 1020.10 -13.13 Currencies Latest Daily % change Brazil real 4.9955 -3.72 Mexico peso 22.7920 -3.90 Chile peso 854.5 -1.91 Colombia peso 4078 -1.40 Peru sol 3.5518 -0.90 Argentina peso (interbank) 63.0300 -0.21 (Reporting by Shreyashi Sanyal and Susan Mathew in Bengaluru; Editing by Dan Grebler)
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