EMERGING MARKETS-Latam FX weakens as Hong Kong bill sparks trade jitters

By Sagarika Jaisinghani

Nov 20 (Reuters) - Latin American currencies eased on Wednesday as concerns about flaring U.S.-China trade tensions kept investors from buying into riskier assets, while the Chilean peso extended losses for the third day in a row as anti-government protests showed no signs of letting up.

Global stocks retreated from 22-month highs and the dollar edged higher as a U.S. bill meant to protect human rights in Hong Kong amid pro-democracy protests angered China, adding to jitters from a threat by U.S. President Donald Trump to raise tariffs on Chinese imports if a deal was not reached soon. MKTS/GLOBFRX/

The Mexican peso MXN= fell 0.6% and the Colombian peso COP= dipped 0.2%.

"Hong Kong has become an even bigger thorn in the already complicated trade talks between the U.S. and China," said Piotr Matys, senior emerging markets FX strategist at Rabobank.

"The (bill) could slow down the process of reaching an agreement, but one should not over react and assume that it could become an impenetrable obstacle."

A basket of Latin American currencies .MILA00000CUS is on track for its first monthly decline in three, also pressured by unsuccessful oil auctions in Brazil and prolonged civil unrest in Chile.

Chile's peso CLP= shed 1.3%, erasing all its gains from Friday, when lawmakers yielded to demands of protesters and agreed to hold a referendum to overhaul the country's dictatorship-era constitution.

The currency, which has lost over 9% since Oct. 21 when protesters turned to vandalism, also looked past a rise in copper prices after top consumer China cut interest rates to shore up growth. Chile is the world's biggest producer of the red metal.

The country's stock index .SPIPSA fell 0.4%, while Argentina's MerVal index .MERV was up 2.2%.

Mexico shares .MXX inched up 0.1%, partly lifted by Mexican cement maker Cemex CEMEXCPO.MX, which said late on Tuesday that its corporate venture capital unit would enter the Chinese market by partnering with two local firms.

A Reuters poll that showed annual inflation in Mexico likely accelerated slightly in the first half of November, in part due to an end in government power subsidies used for air conditioning during the hot season.

Focus now turns to announcements from central banks for clues on monetary policy. Minutes from the U.S. Federal Reserve's latest policy meeting are due on Wednesday, while European Central Bank chief Christine Lagarde delivers her first major speech on Wednesday.

Financial markets in Brazil were closed for a local holiday.

Key Latin American stock indexes and currencies at 1520 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1052.01

-0.49

MSCI LatAm .MILA00000PUS

2664.09

0.24

Brazil Bovespa .BVSP

-

-

Mexico IPC .MXX

43647.71

0.1

Chile SPIPSA .SPIPSA

4772.89

-0.4

Argentina MerVal .MERV

32972.91

2.233

Colombia IGBC .IGBC

-

-

Currencies

Latest

Daily % change

Brazil real BRBY

-

-

Mexico peso MXN=D2

19.4586

-0.63

Chile peso CLP=CL

794.2

-0.91

Colombia peso COP=

3446.62

-0.28

Peru sol PEN=PE

3.3858

-0.29

Argentina peso (interbank) ARS=RASL

59.7200

-0.04

(Reporting by Sagarika Jaisinghani and Shreyashi Sanyal in Bengaluru)

((Sagarika.Jaisinghani@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 6749 0613;))

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