December 21, 2018 / 10:04 PM / a month ago

EMERGING MARKETS-Latam FX slides vs resurgent dollar, stocks dip

 (Recasts; updates prices, adds market strategist's quote)
    By Aaron Saldanha
    Dec 21 (Reuters) - Latin American currencies eased on Friday
against a resurgent dollar, as weak risk sentiment took its toll
on the region, while Latin American stocks joined a decline in
global equities. 
    Market participants unwound riskier bets in emerging markets
to pile into safer assets as persistent stock market volatility
and a possible U.S. government shutdown underpinned weakness
among Latin American currencies and supported the dollar.

    MSCI's index of Latin American currencies 
posted a loss of 0.45 percent, on a day when investors bid up
the safe-haven Japanese yen.
    Ricardo Gomes da Silva Filho, an exchange trader at
Correparti Corretora, said the recovery in the dollar - which
had weakened for two sessions after the U.S. Federal Reserve
flagged fewer interest rate hikes for the next two years - was
pressuring Brazil's real, which dived 1.6 percent. 
    The Bovespa stocks benchmark, however, rose 0.5
percent. Ari Santos, head of the Bovespa desk at brokerage
H.Commcor, pegged the gain on investors snapping up stocks which
had sold off earlier in the week. 
    Mining giant Vale SA jumped up 2.1 percent, its
biggest one-day gain in three weeks. 
    State-run oil firm Petroleo Brasileiro SA edged
0.1 percent higher but still posted a third straight weekly
loss. It remained anchored not far from an over two and a half
month closing low clocked on Thursday. 
    Low global oil prices, which are down about 11.2
percent this week and on pace for their worst December
performance since 2015, have weighed heavily on stocks of oil
majors globally this week.  
    In Brazil's bond market, the surplus yield investors receive
by holding local 10-year bonds as compared to U.S.
10-year bonds plumbed an over 11-year trough during
Friday's session.
   Rising U.S. rates have drained capital away from emerging
markets during 2018, as increasing returns on dollar-denominated
assets have reduced the attractiveness of securities in the
developing world.
    Mexico's peso softened 0.3 percent while its main
stocks index fell 0.6 percent to snap a three-day winning
run. 
    Chilean equities rose 0.2 percent while the
peso fell 0.4 percent as prices of key export copper
 dipped. 
    Colombia's peso softened 0.7 percent, while its
stocks edged up 0.2 percent.
    The country's central bank left borrowing costs stable at
4.25 percent on Friday, unchanged since last April. The decision
comes despite data showing annual consumer prices rose 3.27
percent in November, above the bank's ideal 2019 inflation
target of 3 percent.
    Argentina's peso firmed a touch but its benchmark
MerVal stock index dropped 2.7 percent.
        
    Key Latin American stock indexes and currencies at 2135 GMT
    
 Stock indexes               Latest          Daily   YTD pct
                                               pct    change
                                            change  
 MSCI Emerging Markets            957.33     -0.26    -17.36
                                                    
 MSCI LatAm                     2,521.49     -0.26    -10.84
 Brazil Bovespa                85,697.15       0.5     12.17
 Mexico IPC                    41,468.56     -0.52    -15.98
 Chile IPSA                     5,063.33       0.2      0.20
 Argentina MerVal              28,456.92     -2.69     -5.35
 Colombia IGBC                 11,013.71      0.16     -3.14
                                                            
 Currencies                       Latest     Daily   YTD pct
                                               pct    change
                                            change  
 Brazil real                      3.9034     -0.24    -15.12
 Mexico peso                     19.9504     -0.38     -1.26
 Chile peso                       692.02     -0.18    -11.18
 Colombia peso                     3,292     -0.73     -9.42
 Peru sol                          3.358     -0.27     -3.60
 Argentina peso (interbank)      37.9750      0.22    -51.02
                                                    
 
    
 (Reporting by Aaron Saldanha in Bengaluru, Additional reporting
by Iuri Dantas and Gabriela Melo; editing by Jonathan Oatis and
G Crosse)
  
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