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EMERGING MARKETS-Latam assets slide as U.S.-China trade war froths

Credit: REUTERS/Thomas White

Latin American currencies softened against the dollar on Monday, with global risk appetite hammered by rising U.S.-China trade tensions, which prompted some investors in Latin American stocks to cash out their chips in a rush.

By Aaron Saldanha

May 13 (Reuters) - Latin American currencies softened against the dollar on Monday, with global risk appetite hammered by rising U.S.-China trade tensions, which prompted some investors in Latin American stocks to cash out their chips in a rush.

China plans to impose higher tariffs on $60 billion worth of U.S. goods it would target, the latest salvo in the top two economies' trade war. MKTS/GLOB

The yuan CNH= hit its lowest level against the dollar since December, setting a broadly negative tone for emerging markets currencies against the greenback. FRX/

MSCI's index of Latin American currencies .MILA00000CUS dipped 0.5%, while its Latin American stocks index .MILA00000PUS dived 2.6% to a 5-1/2-month low.

Mexico's peso MXN= softened 0.7%, the smallest decline among its regional peers. Stocks .MXX slid 0.6%.

Banco de Mexico (Banxico) meets later this week and many market participants expect rates to remain at 8.25%.

"If you are holder of Cetes (Mexican Treasury certificates), you're locking in really good interest rates and then there's the prospect for them (Banxico) to ease maybe over the summer," said Marc C. Chandler, chief market strategist at Bannockburn Global Forex.

"It's a really interesting play and I think it's a cash register for a lot of hedge funds and I think they are reluctant to give it up. For me, even if the peso weakens up to 19.50, at that price there will still be buyers."

Brazil's real BRL= weakened 0.8%, while stocks on the Bovespa .BVSP dropped 2.7% on broad-based losses.

Against a backdrop of lower oil prices LCOc1, common shares PETR3.SA and preferred shares PETR4.SA of state-run oil firm Petroleo Brasileiro SA (Petrobras) slid 2.9% each. O/R

Petrobras is not planning on selling any refining assets beyond the refineries it has already publicly slated for divestment, an executive wrote to employees last week.

Iron ore mining giant Vale SA VALE3.SA shed 4.1%. China is an important market for the firm's exports of the steel making ingredient.

Petrochemical producer Braskem SA BRKM5.SA dived 7%. The New York Stock Exchange will start a delisting process for Braskem's U.S.-listed shares, the firm said, after it failed to file its 2017 annual report on time.

Chile's peso CLP= fell 1.1%, following lower prices of Chile's top export, copper CMCU3. China is the world's top importer of the metal. MET/L

Argentina's stocks benchmark .MERV tumbled 3.3%, while the peso ARS= softened as investors shirked riskier positions.

Latin American stock indexes and currencies at 2049 GMT

Stock indexes

Latest

daily % change

MSCI Emerging Markets .MSCIEF

1016.49

-1.64

MSCI LatAm .MILA00000PUS

2586.16

-2.64

Brazil Bovespa .BVSP

91726.54

-2.69

Mexico IPC .MXX

43142.46

-0.55

Chile IPSA .SPCLXIPSA

4969.82

-1.6

Argentina MerVal .MERV

32300.25

-3.27

Colombia IGBC .IGBC

12363.24

-2.36

Currencies

Latest

daily % change

Brazil real BRBY

3.9990

-0.54

Mexico peso MXN=D2

19.2340

-0.72

Chile peso CLP=CL

693.4

-1.14

Colombia peso COP=

3302.98

-0.93

Peru sol PEN=PE

3.327

-0.36

Argentina peso (interbank) ARS=RASL

45.0900

-0.42

(Reporting by Aaron Saldanha in Bengaluru; editing by Grant McCool)

((Aaron.Saldanha@thomsonreuters.com; +91 80 6749 1130; Reuters Messaging: Aaron.Saldanha@thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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