RPT-EMERGING MARKETS-Latam FX, stocks drop as all eyes on U.S.-China talks


 (Repeats with no changes to headline or text) By Aaron Saldanha Feb 11 (Reuters) - Latin American currencies slid the most
in nearly two months on Monday, pressured by a robust dollar
amid cautious sentiment as U.S.-China trade talks resumed, while
Latin American stocks were bogged down by a drop in index
heavyweight Brazil. Defensive positioning among investors resulted in waning
demand for Latin American currencies against the dollar, which
hit a 2019 high, while lower oil prices sparked broad
weakness among energy stocks across most Latin American
exchanges. Felipe Pellegrini, treasury manager at Travelex Bank in
Brazil, said the U.S.-China trade war was far from over and
doubts of the two countries striking a deal were making the
market more volatile, causing investors to attempt to side-step
risk. MSCI's index of Latin American currencies
was down 0.8 percent, while MSCI's index of Latin American
stocks was 1.5 percent lower after hitting a
three-week low. Emerging markets were battered in 2018, pinched between the
U.S.-China trade war and a stronger dollar on the back of U.S.
Federal Reserve rate hikes. A dollar bolstered by skittish
investors this year has the potential to hobble developing world
equities and currencies, alike. Brazil's real weakened 0.8 percent, while the surplus
yield from holding local 10-year bonds over their
U.S. peers hit a more than three-week high during
the session. Sao Paulo-traded stocks dropped 1 percent, weighed
by materials and financials. Soft oil prices sent Petroleo Brasileiro SA's
common shares down 1.3 percent, while the company's preferred
shares slid 1.2 percent. Mining giant Vale SA, also a major component on
MSCI's index for Latin America, tumbled 2.6 percent. Mexican stocks notched a 0.2 percent rise, weathering
a 4.8 percent drop in energy infrastructure firm IEnova after President Andres Manuel Lopez Obrador said
contracts between private firms and state-run power utility CFE should be reviewed to keep electricity prices low. The Mexican peso, one of the developing world's most
liquid currencies, shed 1.2 percent - its worst performance in
about three months. Refinitiv Eikon data showed the currency's trading volumes
on Monday hit about twice their average over the past week in
the wake of Lopez Obrador's statement. A drop in copper prices on U.S.-China trade fears
fed into a 0.6 percent weakening for the Chilean peso.
Chile is the world's top copper exporter. Colombian stocks dipped 0.2 percent, with oil major
Ecopetrol SA down 0.9 percent. The country's peso dropped 0.7 percent. Argentina's peso softened as strong dollar demand
weighed, while its stocks bechmark rose 1 percent. Key Latin American stock indexes and currencies at 2131 GMT: Stock indexes Latest Daily pct change MSCI Emerging Markets 1,035.41 -0.06 MSCI LatAm 2,809.24 -1.47 Brazil Bovespa 94,412.91 -0.98 Mexico IPC 43,262.06 0.19 Chile IPSA 5,375.07 -0.07 Argentina MerVal 37,023.74 0.98 Colombia IGBC 11,877.02 -0.16 Currencies Daily pct change Latest Brazil real 3.7551 0.15 Mexico peso 19.3110 -1.25 Chile peso 661.45 -0.50 Colombia peso 3,136.88 -0.74 Peru sol 3.332 -0.30 Argentina peso (interbank) 37.9000 -0.13 (Reporting by Aaron Saldanha in Bengaluru and Lais Martins in
Sao Paulo; Editing by Leslie Adler) 

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