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EMERGING MARKETS-Mexican peso marks large weekly loss; Petrobras drags down Bovespa

Susan Mathew and Ambar Warrick
·3 min read
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* Petrobras shares slide 6% as CEO resists pressure toresign * Mexican peso lags regional peers this week * Chile's peso sole weekly gainer in Latam (Adds details, updates prices) By Susan Mathew and Ambar Warrick Feb 19 (Reuters) - Brazil's Bovespa slid on Friday as oilmajor Petrobras slumped on concerns about top management, whileMexico's peso lagged its peers for the week as the effects of adeep freeze in the neighboring state of Texas disrupted activityin the country. Shares of Petroleo Brasileiro slidmore than 6%, on course for their worst session in 11 months asits chief executive resisted pressure from Brazil's PresidentJair Bolsonaro to resign following tensions over rising fuelprices. While Bolsonaro has expressed sympathy for truckersthreatening to strike over higher diesel prices, Castello Brancosaid their complaints were not the company's problem andinsisted that Petrobras will set prices independent of politicalpressure. Underperforming most regional peers, the Bovespa index slipped 0.8%, putting it on track for a 1% weeklydecline. Brazil's real, meanwhile rose 0.6% against a softerdollar, but as is the case with most emerging market currencies,looked to post declines on the week as rising U.S. Treasuryyields squeezed risk assets. Brazil's Congress will next week analyze a constitutionalamendment that aims to revive emergency cash transfers tomillions, while examining cuts elsewhere to stop from breachinga spending cap. The country's stretched fiscal status hasweighed on interest in Brazil's financial markets. Mexico's peso weakened 1% as investors worried abouta hit to the country's manufacturing sector. More companieshalted production in Mexico due to power blackouts caused byTexas limiting fuel supply owing to the cold wave there. The peso was set to lose about 2.7% this week, much morethan its regional peers. Meanwhile, Reuters exclusively reported that Mexico'sgovernment is planning to inject a total of about $5 billioninto state oil company Petroleos Mexicanos (Pemex) this year. But market experts were less than enthused. "This is in line with our expectations as well as thelong-standing government approach of offering ad hoc assistanceto Pemex without fixing the core problems," said Citigroupstrategists. Concerns about the weight of bailing out the firm onMexico's economy have led to downgrades by rating agencies ofboth the firm and Mexico's sovereign credit rating. Copper prices rallied and top producer Chile's pesofirmed to six-week highs. The currency was the sole weeklygainer among its peers as expectations of a recovery inindustrial demand drove up copper prices. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1428.25 0.22 MSCI LatAm 2388.66 0.32 Brazil Bovespa 118179.22 -0.86 Mexico IPC 44896.37 0.87 Chile IPSA 4599.84 1.8 Argentina MerVal 51008.71 -1.579 Colombia COLCAP 1349.86 -0.28 Currencies Latest Daily % change Brazil real 5.4088 0.58 Mexico peso 20.5003 -1.03 Chile peso 708 0.34 Colombia peso 3569.3 -0.69 Peru sol 3.6517 -0.02 Argentina peso 89.1400 -0.09 (interbank) (Reporting by Susan Mathew in Bengaluru; editing by JonathanOatis)