April 15, 2014 / 4:10 PM / 4 years ago

EMERGING MARKETS-Latam markets sink as Ukraine, China fuel investor jitters

By Asher Levine
    SAO PAULO, April 15 (Reuters) - Latin American stocks and
currencies dropped on Tuesday, with investor concerns over
escalating tensions in Ukraine and potentially weaker growth in
key trade partner China sapping enthusiasm for local assets.
    The MSCI Latin American stock index posted
its biggest one-day drop in nearly eight months, while nearly
every currency in the region weakened against the U.S. dollar.
    Demand for riskier investments fell across the globe after
Ukraine said an "anti-terrorist operation" against pro-Moscow
separatists was underway and Russia declared Ukraine on the
brink of civil war.
    The mood was darkened further after data on Tuesday showed
China's money supply grew at the weakest pace in more than a
decade in March. The numbers are a sign of softening economic
momentum in Brazil's top trading partner, a key purchaser of
Latin American raw materials such as iron-ore, soybeans and
    Brazil's Bovespa stock index posted its biggest
intraday loss in over ten weeks, as shares of commodities firms
such as iron-ore exporter Vale SA, which counts China
as its biggest customer, sank. 
    Other widely-traded stocks that tend to attract foreign
investors, such as state-run oil firm Petroleo Brasileiro SA,
known as Petrobras, and lender Itau Unibanco Holding
SA, also fell sharply.
    Brazilian stocks caught the attention of global investors
last month following a two-week, 15 percent rally fueled by
rising risk appetite and heightened expectations for a change in
economic policy following October's presidential election.
    "A lot of (the rally) had to do with short squeezes, people
unwinding bets against emerging markets," said Carlos Nielebock,
a trader with ICAP Corretora in Sao Paulo. "That trend is done.
We need some new inspiration. Bad news keeps coming, so we'll
continue to see a weak market."
    Elsewhere in Latin America, Mexico's IPC stock index 
was on-track to close at its lowest level since late March,
while Chile's IPSA index gave up part of the previous
session's gains.
    The region's currencies also weakened, with Brazil's real
 dropping 1 percent against the dollar and Mexico's peso
 slipping 0.5 percent.
    "The trend is for a stronger dollar, following markets
abroad due to the worries over Ukraine," said Reginaldo
Galhardo, a manager at brokerage Treviso in Sao Paulo.
    Chile's peso weakened about 1 percent against the
dollar after government copper commission Cochilco reduced its
global outlook for copper prices, the country's main
    Peru's nuevo sol pared some early losses after data
showed the economy grew more than expected in February from a
year earlier. 
    Key Latin American stock indexes and currencies at 1538 GMT:
 Stock indexes                             daily %     YTD %
                               Latest       change    change
 MSCI Emerging Markets            998.69     -1.29       0.9
 MSCI LatAm                      3199.66     -2.72      2.76
 Brazil Bovespa                    50307      -2.5     -2.33
 Mexico IPC                     40278.94     -0.62     -5.73
 Chile IPSA                       3875.7     -0.46      4.77
 Chile IGPA                     18995.69     -0.37      4.22
 Argentina MerVal                6291.97     -1.66     16.71
 Colombia IGBC                  13867.88     -0.57      6.09
 Peru IGRA                      14727.35     -0.28     -6.51
 Venezuela IBC                   2472.45      0.67     -9.65
 Currencies                                daily %     YTD %
                                            change    change
 Brazil real                      2.2341     -0.93      5.49
 Mexico peso                     13.0986     -0.58     -0.52
 Chile peso                        554.6     -0.92     -5.14
 Colombia peso                   1931.99     -0.35      0.00
 Peru sol                          2.782      0.00      0.40
 Argentina peso (interbank)       8.0000      0.03    -18.84
 Argentina peso (parallel)         10.26      0.19     -2.53

 (Additional reporting by Bruno Federowski; editing by Andrew

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