European Markets

Chile's peso slides over 1% on copper price worries

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  • Chile's Codelco sees copper prices falling next year
  • Chile stocks slide 3.4%
  • Brazil stocks seen rebounding in 2022 - Reuters poll
  • Argentine stocks surge almost 6%

Dec 1 (Reuters) - Chile's peso slipped 1.3% on Wednesday on the prospect of falling copper prices, while most other Latin American currencies firmed against a steady dollar.

Chile's currency moved back towards seven-month lows, while the Santiago stocks index (.SPIPSA) sank 3.4%, extending losses to a seventh straight session.

Chile's state-owned Codelco, the world’s largest copper producer, said on Wednesday it expects copper prices to fall in a year to between $3.80 and $3.90 per pound, down from prices currently just below $4.30 per pound. read more

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Copper prices on the London Metals Exchange gave up gains to slip 0.3% after Codelco's estimate.

Data on Wednesday also showed economic activity in Chile jumped 15% in October from a year ago, but missed analysts estimates.

"We doubt that Chile's economy will continue to operate above its potential as several challenges to growth are emerging," said EM economist Nikhil Sanghani with Capital Economics, citing slowing growth in China, the pandemic, and a hawkish monetary policy.

Meanwhile, the new Omicron variant of the coronavirus is likely to soon spread to other countries in North and South America after being detected in Canada and Brazil, the Pan American Health Organization said on Wednesday.

"While the market is trying to ascertain how negative a shock Omicron may be, volatility is likely to stay high, with a negative bias for risky assets," economists at Citi wrote in a client note.

"We have been negative on EMFX going into this, and Omicron should give another boost to EMFX weakness."

Brazil's real slipped 0.4% to one-month lows. read more

Most other Latam currencies rose, with rising oil prices helping Mexico's peso extend gains to a third straight session, while Colombia's peso pulled further away from 19-month lows.

Stocks in the region were mixed, with Brazil's main index (.BVSP) losing 1%, while Argentine stocks surged almost 6% - on track for their best session in 16 months.

Argentina's government said that a team from the economy ministry and central bank would travel to Washington this weekend to meet with International Monetary Fund staff and push forward talks over a new deal. read more

Brazilian Economy Minister Paulo Guedes said that the country should privatize state-run oil company Petrobras (PETR4.SA), before it becomes irrelevant and oil loses value. Shares were up between 0.7% and 1%. read more

A Reuters poll showed Brazil's stocks are likely to rebound in 2022 from this year's steep decline, as investors hunt for bargains but that political uncertainty in the run-up to the country's 2022 presidential vote could pose risks. read more

Key Latin American stock indexes and currencies at 1435 GMT:

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Reporting by Shreyashi Sanyal in Bengaluru Editing by Alistair Bell

Our Standards: The Thomson Reuters Trust Principles.

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