Cooper Metals – EMERGING MARKETS-Latam FX hits over 5-month low as ‘stagflation’ fears grow

    * Mexican peso hits 6-month low, auto production slumps
    * Brazil's real at over 5-month low
    * Chile stocks lead declines among Latam peers

 (Updates to close)
    By Ambar Warrick and Susan Mathew
    Oct 6 (Reuters) - An index of Latin American currencies
slipped to a more-than five-month low on Wednesday following
weak economic data and as a spike in oil prices stoked fears of
overheated inflation. 
    MSCI's index of Latin American currencies
slipped as much as 0.9% to its lowest level since late-April,
before cutting some losses. 
    Investors feared that the jump in oil prices could keep
price pressures elevated and throttle economic growth in
emerging markets. The dollar rode the safe-haven rally high,
further denting EM currencies.
    "Recent spikes in oil prices are negative for emerging
markets as they further fuel the stagflation fear," said Jakob
Christensen, chief analyst, head of EM research at Danske Bank. 
    Mexico's peso and Brazil's real both traded
flat after having dropped as much as 1.5% and 1.2% respectively.
    Data on Wednesday showed automotive production in Brazil and
Mexico, Latin America's two largest economies, plummeted in
September, dragged down by an industry-wide semiconductor chip
shortage and railroad blockades in Mexico, data showed on
Wednesday.
    While higher oil prices usually benefit the peso, given
Mexico is an oil exporter, the currency slumped as market
volatility saw investors move out of using the currency for
carry trade. 
    In Brazil, separate data showed retail sales fell in August
due to the lingering effects of the COVID-19 pandemic.
 
    Investors were now also awaiting a vote next week over a
proposed fuel tax reform - a hot political topic in Brazil, as
President Jair Bolsonaro seeks to calm frustrations over rising
costs.
    Currencies of copper exporters Chile and Peru
fell around 0.2% each as prices of the red metal slumped on
concerns over slowing Chinese demand.
    A day after Peru's government struck a deal to avoid road
blockades at the Las Bambas copper mine, an indigenous community
in the Espinar province blocked a key mining road in protest
against the government and Glencore's Antapaccay copper
mine.
    In Chile, an association of U.S. businesses in Chile warned
on Tuesday that a proposal to allow Chileans to draw money from
their pension funds for the fourth time since the coronavirus
pandemic began could seriously harm the country's business
climate.
    Strategists at Citi are also watchful of calls by the
opposition for the impeachment of President Sebastian Pinera in
the light of the "Pandora papers", ahead of general elections
next month.
    Latin American stocks fell, with Chile's IPSA index
 sliding 2.3% and having touched an over four-month
trough, as electric utility Colbun tumbled after a
recent rally had pushed it to six-month highs.  
    
    Key Latin American stock indexes and currencies:
 
   Stock indexes           Latest    Daily %
                                     change
 MSCI Emerging Markets      1227.77    -0.71
                                     
 MSCI LatAm                 2199.03    -0.46
                                     
 Brazil Bovespa           110308.88    -0.13
                                     
 Mexico IPC                50915.57    -0.28
                                     
 Chile IPSA                 4130.63    -2.26
                                     
 Argentina MerVal          77360.58   -1.063
                                     
 Colombia COLCAP            1373.15    -0.73
                                     
                                            
      Currencies           Latest    Daily %
                                     change
 Brazil real                 5.4881    -0.09
                                     
 Mexico peso                20.5770    -0.12
                                     
 Chile peso                   812.9    -0.18
                                     
 Colombia peso              3784.57    -0.09
                                     
 Peru sol                     4.137    -0.19
                                     
   

 (Reporting by Ambar Warrick and Federica Urso;
Editing by Alison Williams and Alistair Bell)