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EMERGING MARKETS-Mexican peso leads losses in Latam FX on U.S.-China trade standoff

Credit: REUTERS/JOSE LUIS GONZALEZ

Latin American assets moved lower on Wednesday as investors fled risky bets after a report that an initial trade deal between United States and China may not be completed this year.

By Medha Singh

Nov 20 (Reuters) - Latin American assets moved lower on Wednesday as investors fled risky bets after a report that an initial trade deal between United States and China may not be completed this year.

The tariff-sensitive Mexican peso MXN= hit its weakest level in six weeks against a steady dollar .DXY. Markets in Brazil, the region's biggest economy, remained shut for a holiday.

Completion of a "phase one" U.S.-China trade deal could slide into next year, trade experts and people close to the White House told Reuters, as Beijing presses for more extensive tariff rollbacks, and the Trump administration counters with heightened demands of its own.

This comes ahead of the next round of U.S. tariffs on Chinese imports, including holiday gift items like electronics and Christmas decorations, due on Dec. 15.

"The hope has been in the market that a phase one deal would be done before that," said Scott Ladner, chief investment officer at Horizon Investments in Charlotte, North Carolina.

"It brings into the realm of probability that those tariffs would come into effect. That's something the market is unprepared for."

The report added to jitters after the U.S. Senate passed a bill meant to protect human rights in Hong Kong, which drew China's criticism.

Emerging markets assets have broadly risen this quarter on hopes that the world's top two economies will strike a trade deal to end a damaging tariff war.

Chilean peso CLP= dropped 0.8% as signs of civil unrest in the country showed no signs of abating. The peso has dropped more than 10% since Oct. 21 when widespread protests against social inequality in the country turned violent.

The increasing uncertainty in Chile will impact "economic growth next year but we are far away for a serious questioning of the Chilean model which was so successful in the last few decades," said Luiz Ribeiro, head of Latin American equities at DWS Group.

Stock in the region were also mostly lower with Mexico's IPC .MXX and Chile's IPSA .SPIPSA down. Bucking the trend, Argentina's Merval .MERV rose 2.8%.

Key Latin American stock indexes and currencies at 1900 GMT:

Stock indexes

Latest

daily % change

MSCI Emerging Markets .MSCIEF

1051.43

-0.54

MSCI LatAm .MILA00000PUS

2659.66

0.07

Brazil Bovespa .BVSP

-

-

Mexico IPC .MXX

43539.65

-0.14

Chile IPSA .SPISA

4786.34

-0.12

Argentina MerVal .MERV

33319.57

3.308

Currencies

Latest

daily % change

Brazil real BRBY

-

-

Mexico peso MXN=D2

19.4858

-0.77

Chile peso CLP=CL

792.6

-0.71

Colombia peso COP=

3441.1

-0.12

Peru sol PEN=PE

3.382

-0.18

Argentina peso (interbank) ARS=RASL

59.7150

-0.03

(Reporting by Medha Singh in Bengaluru, additional reporting by Sinead Carew in New York)

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

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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