November 27, 2012 / 11:14 PM / 5 years ago

EMERGING MARKETS-With Greece deal done, U.S. "cliff" hits Latam stocks

* "Fiscal cliff" continues to weigh
    * Brazil Bovespa falls 0.86 pct, Mexico IPC down 0.26 pct

    By Danielle Assalve and Gabriel Stargardter
    SAO PAULO/MEXICO CITY, Nov 27 (Reuters) - Latin American
stocks fell on Tuesday as investors brushed aside early gains on
news of a Greek debt rescue plan to focus on the continued
uncertainty surrounding the so-called U.S. "fiscal cliff."  
    Early trading received a boost after international lenders
agreed on a plan to cut Greek debt, a prerequisite for the
release of bailout funds to Greece.
    But the gains were short-lived, with Brazil's Bovespa
 ending the day down 0.86 percent and Mexico's IPC 
losing 0.26 percent.
    "The Greece deal helped but the trend is still a losing one,
as the news we have is just palliative," said Guilherme Sand, a
partner with Zenith Asset Management in Porto Alegre, Brazil.
    Instead, the focus quickly turned to the political wrangling
over the so-called "fiscal cliff," a package of tax hikes and
spending cuts that could trigger an estimated $600 billion in
tax increases and spending cuts that threatens to trigger
another recession.
    A clear-cut resolution is not in sight, despite pressure
from business interests for a quick solution. 
    "The foreign investor is aloof and a little more cautious,
which we've seen reflected in our market," said Jose Francisco
Cataldo, a retail strategist at the Agora e Bradesco brokerage.
He noted that foreign trades account for nearly 40 percent of
trading activity in the Bovespa.
    "The main concern is with the United States. President
Barack Obama has a tight deadline to negotiate with Congress and
avoid a fiscal abyss," he said.  
    The MSCI Latin American stock index fell
0.59 percent to 3,560.70. The index rose nearly 3 percent last
week after five consecutive sessions of gains but has now lost
more than 1 percent since Friday.
    Commodities producers drove losses in the Bovespa. Shares of
oil producer OGX Petroleo e Gas Participaçoes SA fell
3.69 percent, contributing most to the index's losses, while
state-controlled oil company Petrobras lost 1.65
    Bank of America Merrill Lynch analysts said on Tuesday that
OGX's recent agreement to purchase a stake in an oil block from
Petrobras is positive but highlights the critical issue of cash
flow at the firm. 
    Shares in Brazilian banks also fell on Tuesday after
analysts at Santander Investment Securities said the outlook for
Brazil's largest listed banks remained "challenging" in the
short term as loan growth nears saturation and the high cost of
financial services crimps demand for new credit. 
    Shares in Itaú Unibanco Holding SA fell 1.56
percent, while shares in Banco Bradesco SA slipped
1.53 percent.
    Mexico's IPC index fell for the third session in a
row, losing 0.26 percent to 41,769.38. The index gained more
than 3 percent last week, but has since struggled to rise above
the 42,000 level. 
    Shares of telecommunications giant America Movil 
lost 0.77 percent, contributing most to the index's losses,
while conglomerate Alfa added 2.4 percent.
    Chile's IPSA index tumbled 0.4 percent to 4,116.38
    Latin America's key stock indexes at 2240 GMT:
 Stock indexes                                     % change
 MSCI LatAm                      3,560.70             -0.59
 Brazil Bovespa                 56,248.09             -0.86
 Mexico IPC                     41,769.38             -0.26
 Chile IPSA                      4,116.38              -0.4
 Chile IGPA                     20,252.85             -0.34
 Argentina MerVal                2,328.88             -0.47
 Colombia IGBC                  14,061.21             -0.29
 Peru IGRA                      20,096.61             -0.57
 Venezuela IBC                 396,687.81              0.84

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