EMERGING MARKETS-Latam stocks, FX fall from near 3-month highs as risk rally pauses

2020-06-04
    * Brazil's real falls after gaining 5% over two days
    * Mexican peso tracks oil prices lower
    * Argentine industrial output plummets in April

 (Adds details, updates prices)
    By Susan Mathew and Ambar Warrick
    June 4 (Reuters) - Latin American stocks and currencies came
off near three-month highs on Thursday as a recent rally in risk
assets, driven by hopes of a post-coronavirus economic recovery,
lost steam.
    MSCI's index of Latam stocks and currencies
 broke a three-day winning streak, falling more
than 1% each.
    Still, analysts said risk assets held more upside strength,
with economic indicators across the globe indicating the worst
of the COVID-19 pandemic had passed. 
    Expectations of more stimulus measures, along with optimism
over a resurgence in economic activity, had driven emerging
market assets higher over the past weeks.
    Brazil's real broke a two-day rally that drove the
currency up about 5%, to trade 0.4% lower. The central
bank on Wednesday signaled that policymakers may be prepared to
cut interest rates more than they have previously indicated.

    A Reuters poll showed that along with broader emerging
market peers, Latam currencies are on a recovery path but depend
heavily on calmer domestic politics and signs of economic
recovery.   
    Brazil is moving aggressively to open its economy even as it
posts a record number of coronavirus -deaths. Latin America has
become a hot spot in the outbreak, with Brazil in the No. 2 spot
globally in the number of infections; Mexico overtook the United
States in daily reported deaths this week.

    Mexico's peso fell 0.5% against a steady dollar as
oil prices declined.
    The country's mining chamber on Wednesday said output will
likely fall by about 17% in 2020. Mexico had restarted the
mining industry last month after deeming it an essential sector.

    Chile's peso fell slightly, a day after the country's
central bank said it would gradually scale back its foreign
exchange intervention program in the non-deliverable forward
markets and speak with its U.S. and Chinese counterparts to
broaden the country's foreign exchange lines.   
    "We expect the CLP to underperform its peers in the near
term as the (central bank) buys dollars, although we think it is
likely to continue trading with the broad macro environment and
find support from (U.S.) Treasury sales," said Citigroup
analysts.
    Argentina's peso traded flat, while stocks
fell more than 1% as markets continued watch for the country to
restructure its sovereign debt.
    The country's April industrial output fell 33.5% from the
same month last year, as measures to contain the virus stymied
economic activity.
    Key Latin American stock indexes and currencies:
    
    Stock indexes             Latest     Daily % change
 MSCI Emerging Markets          988.26              0.02
                                        
 MSCI LatAm                    1974.75             -1.14
                                        
 Brazil Bovespa               93985.89              1.06
                                        
 Mexico IPC                   37843.63             -1.17
                                        
 Chile IPSA                    3844.14               0.3
                                        
 Argentina MerVal             43129.89            -1.649
                                        
 Colombia COLCAP               1159.02              0.08
                                        
                                                        
       Currencies             Latest     Daily % change
 Brazil real                    5.1030             -0.39
                                        
 Mexico peso                   21.8730             -0.53
                                        
 Chile peso                      771.5             -0.16
                                        
 Colombia peso                  3588.3              0.49
 Peru sol                       3.4317             -0.87
                                        
 Argentina peso                68.8900             -0.12
 (interbank)                            
                                        
 
    

 (Reporting by Susan Mathew in Bengaluru; editing by Jonathan
Oatis and Leslie Adler)
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