EMERGING MARKETS-Mexico's peso leads Latam FX lower while stocks sink

    * Mexican peso set for worst day since March 16
    * Industrial production in Mexico falls 25% in April
    * Argentine stocks lead loses in equities
    * MSCI Latam equities index eyes worst day since late April

 (Adds details, updates prices)
    By Susan Mathew and Ambar Warrick
    June 11 (Reuters) - Mexico's peso was the biggest loser
among Latin American currencies on Thursday, pushed lower by
tumbling oil prices, with regional stocks falling in tow after
the Federal Reserve's sobering assessment of a U.S. economic
recovery. 
    The dollar surged on safe-haven demand after the U.S.
central bank said the impact of the coronavirus pandemic will be
felt for years, quashing hopes of a quick recovery. It promised
to keep pumping liquidity into markets, but expects the U.S.
economy to shrink 6.5% this year.
    The Fed's outlook was a blow to markets that had touched
three-month highs on hopes of a swift economic recovery through
the scaling back of coronavirus-related curbs.
    Along with worries about a record build-up in U.S. crude
inventories, oil prices slumped more than 6%, weighing on the
currencies of crude exporters in emerging markets such as Mexico
, Colombia and Russia.
    The Mexican peso was on track for its biggest daily drop in
nearly three months. Data showed industrial output fell 25.1% in
April from March and was 29.3% lower on a year-over-year basis.

    Mexican shares plunged nearly 4%, their biggest daily
drop since late March. 
    "Although this (data) may mark the bottom for industry, it
will add pressure for policymakers to respond with additional
stimulus measures to dig Mexico's economy out of this hole,"
Capital Economics said in a note, as the country faces its
deepest recession in decades. 
    The MSCI's index of regional stocks plunged
more than 3%, tracking declines on Wall Street as fears of a
second wave of coronavirus infections further rattled investors.

    The index was set for its worst day since mid-April, with
Argentine stocks serving as the worst performers in the
region with a more than 7% drop.
    Colombia's peso looked to post its sharpest
percentage fall in almost three months. The country's main stock
index skidded 4.6%, marking its worst session in more
than two months, with shares of oil major Ecopetrol
sliding more than 8%. 
    Sliding copper prices weighed on Chile's peso, which
weakened 1.9%. Chilean stocks retreated from
three-month highs. 
    Brazil's markets were closed for a holiday. 

    Key Latin American stock indexes and currencies:
    
    Stock indexes             Latest     Daily % change
 MSCI Emerging Markets          990.56             -2.17
                                        
 MSCI LatAm                    1984.69             -3.35
                                        
 Mexico IPC                   36767.87             -3.92
                                        
 Chile IPSA                    3937.26             -3.12
                                        
 Argentina MerVal             42962.29             -7.56
                                        
 Colombia COLCAP               1124.17             -4.57
                                        
                                                        
       Currencies             Latest     Daily % change
 Mexico peso                   22.6951             -3.69
                                        
 Chile peso                      787.3             -1.89
                                        
 Colombia peso                 3763.31             -2.48
 Peru sol                       3.4587             -0.98
                                        
 Argentina peso                69.3100             -0.07
 (interbank)                            
                                        
 
    

 (Reporting by Susan Mathew in Bengaluru; Editing by Bernadette
Baum and Paul Simao)
  

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