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EMERGING MARKETS-Mexico falls on USMCA worries, Wall St recovery buoys some Latam stocks

Credit: REUTERS/HENRY ROMERO

Worries that Mexico's trade deal with Canada and the United States may get derailed weighed on Mexico's stocks and the peso currency on Wednesday, while a strong dollar kept most other Latin American currencies pressured.

By Susan Mathew

Sept 25 (Reuters) - Worries that Mexico's trade deal with Canada and the United States may get derailed weighed on Mexico's stocks and the peso currency on Wednesday, while a strong dollar kept most other Latin American currencies pressured.

Mexico's peso MXN= fell 0.5% for its worst day in nearly a month, while the main stock index .MXX extended losses to a third day and touched a two week low.

U.S. President Donald Trump warned that an impeachment inquiry against him could derail congressional approval of the U.S-Mexico-Canada trade agreement (USMCA), a trillion-dollar deal signed by the three nations last year to replace the North American Free Trade Agreement (NAFTA).

Amid calls by leaders of Mexico and Canada urging the United States to ratify the deal, U.S. Trade Representative Robert Lighthizer said he was confident the deal would come up for a vote and pass.

"USMCA is on life support," said James Lucier, an analyst with Capital Alpha Partners. The firm has lowered its estimated likelihood of passage for the USMCA to 30%.

Broader sentiment, meanwhile, remained fragile. MKTS/GLOB

A recovery in U.S. stocks after Trump said a trade deal with China could happen sooner than expected, helped most regional stocks erase early losses and turn positive. .N

After he toughened his trade rhetoric with China on Tuesday, Trump on Wednesday said a deal to end a nearly 15-month trade war with China could happen sooner than people think and that the Chinese were making big agricultural purchases from the United States.

Shares in Argentina .MERV rose for the first time in four sessions, up 1.4%, while those in Brazil .BVSP climbed half a percent.

Currencies in Brazil BRL= and Colombia COP= also eked out gains.

But uncertainty around an impeachment investigation against Trump and persistent fears of slowing global growth saw investors move to safer assets such as the dollar, which in turn pressured most Latin American currencies. FRX/

Those of Chile CLP=, Argentina ARS= and Peru PEN= fell between 0.2% and 0.6%

Key Latin American stock indexes and currencies at 1956 GMT:

Stock indexes

Latest

Daily % change

MSCI Emerging Markets .MSCIEF

1006.06

-0.52

MSCI LatAm .MILA00000PUS

2673.11

0.49

Brazil Bovespa .BVSP

104347.81

0.45

Mexico IPC .MXX

42917.69

-0.42

Chile IPSA .SPIPSA

5006.24

0.11

Argentina MerVal .MERV

28196.91

1.356

Colombia IGBC .IGBC

12912.13

-0.3

Currencies

Latest

Daily % change

Brazil real BRBY

4.1527

0.39

Mexico peso MXN=D2

19.5514

-0.57

Chile peso CLP=CL

727.4

-0.60

Colombia peso COP=

3428.75

0.15

Peru sol PEN=PE

3.35

-0.27

Argentina peso (interbank) ARS=RASL

57.0550

-0.27

(Reporting by Susan Mathew in Bengaluru; Editing by Sandra Maler)

((susan.mathew@thomsonreuters.com; +91-80-6749-1130))

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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