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MSCI Latam stocks index off 0.5%, FX slips 0.3%

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Commodity stocks take a hit on lower metals prices

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Mexico central bank cuts rate but flags trade tensions, weak economy

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Romanian leu flat after rate decision, eyes on presidential vote

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Ukraine says it will not rush to restructure warrant debt

(Updates with mid-session prices)

By Nikhil Sharma, Johann M Cherian and Purvi Agarwal

May 16 (Reuters) - Latin American currencies were mixed on Friday, with those of

industrial metal exporters hit by falling commodity prices, while investors also looked for

fresh developments on the trade front as optimism from the U.S.-China trade truce waned.

MSCI's index for regional currencies was down 0.3% as the dollar rebounded.

The index is set for its first weekly decline in over a month, while a gauge for regional stocks

fell 0.5%.

Currencies of the world's top copper producers Chile and Peru dipped 0.7% and

0.2%, respectively, tracking lower prices of the red metal.

Brazil's real reversed losses to gain 0.3%.

A bird flu outbreak on a poultry farm in the world's largest chicken exporter triggered a

country-wide ban from top buyer China and state-wide restrictions from other consumers.

Investors globally were taking a pause after robust gains following a thaw in tense

relations between the U.S. and China earlier in the week. However, analysts pressed that

uncertainty prevailed and the outlook for the global economy was in question.

"(The move) reflects the ongoing uncertainty related to the U.S.-China trade relations. The

initial hype of that optimism of the potential de-escalation of the U.S.-China trade tension was

high but people realize they're still there," said Vivian Lin Thurston, portfolio manager at

William Blair.

"A lot of moves (in risk assets) are not driven by the fundamentals of companies or

countries, but by the sentiment and risk mentality."

A global slowdown could impact commodity prices, which would affect revenue for export-heavy

Latam economies.

Mexico's peso was up 0.1% a day after the country's central bank lowered its

benchmark interest rate by 50 basis points to 8.50%.

The policymakers projected further rate cuts of similar magnitude if inflation stays within

the bank's target range.

For the week, the local currency was down slightly, but its stock index IPC was up

about 2.8%.

Mining companies such as Brazil's Vale and Mexico's Grupo Mexico

pared early declines and were marginally lower, tracking weak industrial metal prices.

Shares of top energy companies, such as Argentina's YPF, Brazil's Petrobras

and Colombia's Ecopetrol, were flat to marginally lower.

In Turkey, direct talks between representatives from Moscow and Kyiv ended without a

ceasefire agreement after a Ukrainian source said Russia presented conditions that went beyond

its previous demands.

Separately, Ukraine's chief debt negotiator told investors this week that Kyiv is in no

hurry to restructure its GDP-linked debt, three sources told Reuters, effectively preparing them

for possible default on a payment due within weeks. Ukraine's GDP warrants

were broadly muted.

Elsewhere, Romania's leu slipped 0.3% after the domestic central bank stood pat on

its benchmark interest rate at 6.50%, ahead of the deciding round of the country's presidential

election on Sunday.

On the other hand, dollar bonds maturing in 2053 and 2051

gained over one cent on the dollar each.

Markets braced for a possible victory for hard-right frontrunner George Simion, which could

deepen the political crisis, probably hurting the country's efforts to reduce massive budget

deficits. The country's assets witnessed sharp declines in the aftermath of Simion's victory in

the first round.

Meanwhile, Trump wrapped up his Gulf tour on Friday, signing several multibillion-dollar

business deals.

Latin American market

prices from Reuters

Equities Latest Daily %

change

MSCI Emerging Markets 1171.36 -0.18

MSCI LatAm 2263.89 -0.47

Brazil Bovespa 138980.89 -0.25

Mexico IPC 58216.3 0.44

Chile IPSA 8339.15 -0.85

Argentina Merval 2312190.2 0.597

8

Colombia COLCAP 1655.6 -0.67

Currencies Latest Daily %

change

Brazil real 5.6664 0.26

Mexico peso 19.4631 0.11

Chile peso 944.68 -0.73

Colombia peso 4171 0.68

Peru sol 3.6865 -0.15

Argentina peso (interbank) 1142 -0.26

Argentina peso (parallel) 1145 1.75