February 2, 2018 / 10:37 PM / in 10 months

EMERGING MARKETS-LatAm markets fall on U.S. rate hike prospects after wage data

 (Updates prices, adds news from Mexico and Argentina)
    By Bruno Federowski
    SAO PAULO, Feb 2 (Reuters) - Latin American markets
retreated on Friday after data showing U.S. job growth surged in
January and wages increased, lifting expectations of faster U.S.
interest rate hikes, which could dampen demand for risky
emerging market assets.
    The robust employment report bolstered expectations of price
pressures that could drive U.S. inflation back toward the
official target.
    It underscored strong momentum in the economy, raising the
possibility that the Federal Reserve could be a bit more
aggressive in raising interest rates this year. The U.S. central
bank has forecast three rate increases this year after raising
borrowing costs three times in 2017.
    Higher U.S. rates could lessen demand for risky assets,
which typically offer higher yields. That perception drove
widespread profit-taking on emerging markets, which had
undergone a sharp rally in the first month of the year.
    The currencies of Brazil, Mexico and
Colombia fell between 0.13 percent and 1.59 percent.
    Also curbing demand for Brazilian assets were concerns over
an unpopular bill cutting social security spending, which
investors see as key to fueling long-term economic growth.
    "Local caution adds to risk aversion worldwide, bumping the
dollar up against the Brazilian real," Spinelli brokerage trader
José Amado said.
    Along with Argentina and Colombia, Brazil's benchmark
Bovespa stock index led the losses among Latin American
stock markets, weighed down by blue-chips such as lender Itaú
Unibanco Holding SA and Banco Bradesco SA
and miner Vale SA.
    Shares in Argentine power company Central Puerto SA CEPU.BA
fell as much as 24 percent on the Buenos Aires stock exchange on
Friday after the company's U.S. initial public offering priced
below expectations.
    In Mexico, the central bank is expected to raise interest
rates next week to a nine-year high in order to contain worries
that inflation may not cool as fast as expected amid concerns
the country's peso could be battered again this year.
    Banco de Mexico is expected to hike its key rate
 by 25 basis points to 7.50 percent, a level not
seen since February 2009, according to 17 of 20 and analysts
polled by Reuters. The move would follow a quarter-point hike in
    Key Latin American stock indexes and currencies at 2158 GMT:
 Stock indexes             Latest  daily % change  YTD % change
 MSCI Emerging            1230.83           -1.43          6.25
 MSCI LatAm               3139.05           -2.73         10.99
 Brazil Bovespa          84041.34            -1.7         10.00
 Mexico IPC              50395.83           -0.39          2.11
 Chile IPSA               5825.99           -0.62          4.70
 Chile IGPA              29293.29           -0.58          4.69
 Argentina MerVal        32614.77           -5.85          8.48
 Colombia IGBC           12145.72           -1.44          6.82
 Venezuela IBC            2827.56          -11.29        123.85
 Currencies            Latest      daily % change  YTD % change
 Brazil real               3.2180           -0.13          2.96
 Mexico peso              18.5975           -1.34          5.92
 Chile peso                602.63            0.00          1.99
 Colombia peso               2839           -1.59          5.04
 Peru sol                   3.218            0.00          0.59
 Argentina peso           19.4700           -0.46         -4.47
 Argentina peso             19.87            0.30         -3.22

 (Reporting by Bruno Federowski; Editing by Susan Thomas and Tom
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