January 10, 2018 / 10:04 PM / 9 months ago

EMERGING MARKETS-Mexican assets drop on report Trump could pull NAFTA plug

    By Bruno Federowski and Anthony Esposito
    SAO PAULO/MEXICO CITY, Jan 10 (Reuters) - Mexico's currency
weakened against the dollar on Wednesday and stocks extended
losses after Reuters reported that Canada increasingly believes
that U.S. President Donald Trump will soon announce his
intention to withdraw from NAFTA.
    Two government sources told Reuters they expected Trump to
pull the plug at about the same time that negotiators from the
United States, Canada and Mexico meet in late January for the
sixth round of talks to modernize the North American Free Trade
Agreement (NAFTA).
    Mexico's peso reversed slight gains against the
dollar after the report, and was trading down around 0.4
percent. The S&P/BM IPC stock index was down about 1.8
percent, heading for its biggest loss since Oct. 25.
    Trump has repeatedly threatened to walk away from NAFTA, a
lynchpin of the Mexican economy, unless Canada and Mexico agree
to major changes Washington claims are needed to make the 1994
pact more fair to U.S. workers and businesses.
    Yields on short-term Brazilian interest rate futures inched
up on Wednesday as higher-than-expected inflation data for 2017
drove traders to trim bets on two additional interest rate cuts.
    Price pressures have been muted for months in Brazil, curbed
by double-digit unemployment despite an acceleration in economic
growth. That may allow the central bank to keep rates at
all-time lows for a long time, bolstering the economy's
recovery.
    The benchmark Bovespa stock index fell 0.84 percent,
extending losses for a second day as traders booked profits from
a rally early in the year that took it to all-time highs.
    
    Key Latin American stock indexes and currencies at 20:47
GMT:
   
 Stock indexes                                daily %     YTD %
                               Latest          change    change
 MSCI Emerging Markets             1197.84      -0.61      4.03
                                                       
 MSCI LatAm                        2931.06      -0.76      4.43
                                                       
 Brazil Bovespa                   78200.57      -0.84      2.35
                                                       
 Mexico IPC                       48817.09      -1.78     -1.09
                                                       
 Chile IPSA                        5678.09      -0.56      2.04
                                                       
 Chile IGPA                       28570.82      -0.52      2.11
                                                       
 Argentina MerVal                 31618.65      -1.62      5.17
                                                       
 Colombia IGBC                    11807.49      -0.64      3.84
                                                       
 Venezuela IBC                     1327.47       1.98    -95.81
                                                       
                                                               
 Currencies                                   daily %     YTD %
                                               change    change
                                    Latest             
 Brazil real                        3.2280      -0.02      2.64
                                                       
 Mexico peso                       19.3000      -0.33      2.07
                                                       
 Chile peso                         608.37      -0.06      1.03
                                                       
 Colombia peso                      2888.5       0.67      3.24
 Peru sol                            3.222      -0.12      0.47
                                                       
 Argentina peso (interbank)        18.6100       1.91     -0.05
                                                       
 Argentina peso (parallel)           19.27       1.40     -0.21
                                                       
                                                               
 
 (Reporting by Bruno Federowski in Sao Paulo & Anthony Esopsito
in Mexico City; Editing by Paul Simao and Meredith Mazzilli)
  
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