RIO DE JANEIRO, Feb 26 (Reuters) - Chilean equities led losses across the region on Monday, with the nation's blue-chip IPSA index falling over 1 percent largely due to share price declines in the country's lithium and forestry sectors.
Shares in Sociedad Quimica y Minera de Chile SA (SQM) , which has attracted investor interest due to increasing demand for lithium from electric car makers, fell almost 8 percent, leading losses on the index after analysts at Morgan Stanley cut their rating on the stock to "underweight" from "equal-weight." Shares in Sociedad de Inversiones Oro Blanco SA, an investment vehicle with an indirect stake in SQM, followed as the second-biggest loser, its shares falling almost 5 percent.
In the Morgan Stanley note, analysts wrote that they expect prices for lithium to peak in 2018, before falling 45 percent by 2021, as demand growth falls far short of what is needed to absorb growing supply.
Stocks in Chile's forestry sector also fell. Shares in forestry firm Empresas CMPC SA and Empresas Copec SA , which operates in forestry through subsidiary Arauco, both slid between 2 and 3 percent, due to what traders described as profit taking in the sector.
Overall, the IPSA had fallen 1.15 percent in afternoon trade.
Elsewhere in Latin America, Mexico's IPC equities index also fell on Monday, as companies reported generally unimpressive earnings figures, while December retail sales fell 0.5 percent from the previous month.
"The Q4 corporate earnings reports weren't a positive catalyst for the stock market," Santander analysts wrote in a note.
Traders were also cautious as the seventh round of North American Free Trade Agreement negotiations open in Mexico City, amid continued tough talk from U.S. President Donald Trump and little hope of a breakthrough among negotiators.
The IPC had fallen 0.54 percent in morning trade.
Key Latin American stock indexes and currencies at 1638 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1221,01 0,38 5 MSCI LatAm 3163,00 0,03 11,8 Brazil Bovespa 87647,26 0,41 14,72 Mexico IPC 48380,11 -0,54 -1,97 Chile IPSA 5676,67 -1,15 2,01 Chile IGPA 28509,29 -0,95 1,89 Argentina MerVal 32712,28 -0,09 8,80 Colombia IGBC 11876,96 -0,2 4,45 Venezuela IBC 5079,10 -1,87 -83,98 Currencies daily % YTD % change change Latest Brazil real 3,2356 0,15 2,40 Mexico peso 18,6400 -0,53 5,68 Chile peso 587 0,73 4,71 Colombia peso 2846,77 -0,10 4,75 Peru sol 3,247 0,09 -0,31 Argentina peso 20,0400 -0,30 -7,19 (interbank) Argentina peso 20,2 -0,50 -4,80 (parallel) (Reporting by Gram Slattery and Felipe Iturrieta; Editing by Susan Thomas)