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EMERGING MARKETS-Latam stocks subdued; currencies firm against weak greenback

Credit: REUTERS/© Nacho Doce / Reuters

Most Latin American stock markets traded in a tight range on Tuesday, while currencies strengthened against a weak dollar, as comments by U.S. President Donald Trump sparked fears of a delay in the resolution to the Sino-U.S. trade war.

By Ambar Warrick

Dec 3 (Reuters) - Most Latin American stock markets traded in a tight range on Tuesday, while currencies strengthened against a weak dollar, as comments by U.S. President Donald Trump sparked fears of a delay in the resolution to the Sino-U.S. trade war.

Global equities dropped after Trump said a trade deal with China might be delayed until after the November 2020 U.S. presidential election. Possible U.S. duties on French goods also kept markets on edge. MKTS/GLOB

Investors had earlier expected an interim trade deal between Washington and Beijing by mid-November, but the prospect of a delayed conclusion now opens the door for further escalation in tensions that have dogged risk assets for more than a year.

A basket of Latin American stocks .MILA00000PUS moved in a flat-to-low range, with Brazilian .BVSP and Chilean .SPIPSA equities reflecting similar trades.

"Trade headlines are certainly making for cautious trade in markets...the mood has certainly become less positive," said William Jackson, chief emerging markets economist at Capital Economics. "It's not a particularly big move one way or the other," he added, referring to Brazil's stock index.

Regional currencies fared slightly better, with an index of local units .MILA00000CUS rising about 0.1% against a weaker dollar, which held declines following disappointing manufacturing data from the United States on Monday. USD/

"The combination of a recovering global economy and softer U.S. is encouraging for USD weakness," Morgan Stanley said in a note, referring to stronger-than-expected manufacturing data from China on Monday.

"We do expect to see further evidence of a global growth rebound going forward and believe this will help EM currencies to recover."

Brazil's real BRL= surged as much as 0.8% after data showed the country's economy expanded at a faster-than-expected pace in the third quarter.

Upward revisions to GDP figures for the first two quarters this year also meant that Latin America's largest economy steered further clear of recession than previously thought.

The Chilean peso CLP= rose amid efforts by the country's central bank to shore up the currency, with an interest rate cut appearing likely this week, according to a Reuters poll.

The Colombian peso CLP= fell about 0.1%, while the Mexican peso MXN= eased around 0.1%.

Key Latin American stock indexes and currencies at 1428 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1037.69

-0.24

MSCI LatAm .MILA00000PUS

2665.12

0.08

Brazil Bovespa .BVSP

108640.25

-0.26

Mexico IPC .MXX

0.00

-

Chile SPIPSA .SPIPSA

4476.25

-0.56

Argentina MerVal .MERV

0.00

-

Colombia Colcap .COLCAP

1598.33

-

Currencies

Latest

Daily % change

Brazil real BRBY

4.1972

0.38

Mexico peso MXN=D2

19.6041

-0.14

Chile peso CLP=CL

800.4

0.35

Colombia peso COP=

3507.55

-0.13

Peru sol PEN=PE

3.391

0.00

Argentina peso (interbank) ARS=RASL

59.9200

0.08

(Reporting by Ambar Warrick in Bengaluru Editing by Alistair Bell)

((Ambar.Warrick@thomsonreuters.com; +91-80-6749-6625; Reuters Messaging: ambar.warrick.thomsonreuters.com@reuters.net; Twitter: @AmbarWarrick))

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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