EMERGING MARKETS-Brazilian stocks fall as fiscal woes cloud earnings
By Agamoni Ghosh
July 25 (Reuters) - Brazil's Bovespa pulled Latin American shares lower on Thursday after data showed the region's largest economy posted its biggest fiscal shortfall since January, but robust earnings from beer-maker Ambev helped contain further losses.
MSCI's index of Latin American stocks .MILA00000PUS fell 1%, with heavyweight indexes in Brazil .BVSP and Mexico .MXX shedding about 0.7% each.
Latest data showed Brazil posted a current account deficit of $2.9 billion in June, the biggest shortfall since January and almost twice as wide as the $1.5 billion deficit median forecast in a Reuters poll.
Brazil's economy is struggling to emerge from a crippling recession, with the government focused on passing through Congress a pension overhaul that it hopes will prop up public finances and kick-start growth.
Shares of Brazilian brewer Ambev ABEV3.SA, rose 8% after the company posted better-than-expected quarterly results, while Bradesco BBDC4.SA sagged despite a 25% rise in recurring profit.
Adding to the dour mood, European Central Bank Chief Mario Draghi reiterated concerns about slowing global growth and all but pledged future interest rate cuts. The ECB held rates steady on Thursday.
Emerging market currencies, which typically gain on bets of interest rate cuts from developed world central banks, fell. MSCI's index for Latin American currencies .MILA00000CUS shed 0.5%.
The overall global data is just turning out to be quite negative and it seems the relief for EM currencies that came on the back of the Fed possibly lowering rates is starting to turn around, said Christian Lawrence, senior strategist, Latam FX, Rabobank.
The Mexican peso MXN= outperformed as oil prices moved higher, while stocks .MXX dropped, weighed down by Cemex CEMEXCPO.MX, which slid nearly 4% after it posted downbeat earnings that were hurt by lower volumes amid trade conflicts.
Chile's peso CLP= fell 0.4%, tracking a dip in the price of copper CMCU3, the country's top export. The peso has shed nearly 12% as the protracted trade war between the United States and China has taken its toll on copper prices.
"Chile is increasingly becoming a proxy for the trade war in this region because of that copper link," Lawrence said.
Key Latin American stock indexes and currencies at 1505 GMT
daily % change
MSCI Emerging Markets .MSCIEF
MSCI LatAm .MILA00000PUS
Brazil Bovespa .BVSP
Mexico IPC .MXX
Chile IPSA .SPIPSA
Argentina MerVal .MERV
Colombia IGBC .IGBC
daily % change
Brazil real BRBY
Mexico peso MXN=D2
Chile peso CLP=CL
Colombia peso COP=
Peru sol PEN=PE
Argentina peso (interbank) ARS=RASL
(Reporting by Agamoni Ghosh in Bengaluru Editing by Paul Simao)
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