EMERGING MARKETS — Brazil election uncertainty, strong dollar put LatAm assets on track for weekly losses

Latam stocks down 0.8%, FX down 0.2% Datafolha poll shows Lula leading Bolsonaro 46% to 44% in runoff scenario Sheinbaum says Mexico and US reached some agreements after call with Trump Mexico peso headed for its worst week since March By Avinash P Sept 18 (Reuters) — Latin American assets were mixed on Friday and remained on track for weekly losses, while the presidential race in the region's largest economy, Brazil intensified and investors monitored trade talks between Mexico and the US.

In Brazil, President Luiz Inacio Lula da Silva held a narrow numerical lead over Senator Flavio Bolsonaro in a potential runoff in the October presidential election, according to a Datafolha poll published on Thursday. In the runoff scenario, Lula had 46% support and Flavio Bolsonaro, had 44%, unchanged from the previous poll. Markets have closely monitored the shift in electoral surveys, and a Lula victory could add to investor anxiety the worsening public finances under the current administration. Local stocks benchmark fell 0.7% and on track for a first weekly loss in five as uncertainty over the presidential elections weighed.

The real dropped 0.7% to 5.1644 a dollar. The broader LatAm stocks gauge fell 0.8% and also on track to a weekly loss. The US dollar reminded firm at multi week highs it touched after a widely expected rate hike by the Federal Reserve on Wednesday, pressuring regional currencies. MSCI's LatAm FX was down 0.2% and headed for a weekly loss.

In Mexico, President Claudia Sheinbaum said on Friday that she spoke with US President Donald Trump on Wednesday, and they reached some agreements. The deal with US had stalled earlier in the year and left investors fretting about the outlook of Mexican exports. Investors will also be looking ahead to Mexican central bank rate decision next week after the policymakers held rates steady at 6.50% in August, extending a pause after a two-year easing cycle. "In Mexico, where the central bank is likely to leave rates on hold next week, the case for the next move to be a hike is strengthening," said William Jackson, chief emerging markets economist at Capital Economics.

Still, the Mexican benchmark stocks index inched lower, and the peso eased 0.5% to 17.2503 per dollar, on track for its worst week since March. Stock market in Chile were closed for a holiday. On a broader scale, Emerging market funds posted net inflows on aggregate, as strong demand for Asian and China tech assets masked widespread outflows across global and hard-currency bond funds, Barclays analysts said. Elsewhere in emerging markets, Turkish benchmark stocks index slid 1.7% and remained in focus after concerns over redemption problem over handful of funds stoked a sell-off in markets earlier this week.

The Turkish Central Bank sold some $5 billion of foreign exchange on Wednesday as fund-driven selling pressure hit stocks, while Bloomberg news reported country's wealth fund stepped into buy blue-chip stocks to stem the market rout. Index provider FTSE Russell said it was monitoring developments after Turkey's Capital Markets Board ordered the liquidation of several investment funds.

Key Latin American stock indexes and currencies at 1525 GMT: Latin American market prices from Reuters Equities Latest Daily % change MSCI Emerging Markets 1708.63 1.23 MSCI LatAm 3080.44 -0.86 Brazil Bovespa 184753.24 -0.67 Mexico IPC 63634.34 -0.37 Chile IPSA — — Argentina Merval 3033088.1 -0.928 7 Colombia COLCAP 2546.34 0.97 Currencies Latest Daily % change Brazil real 5.1644 -0.7 Mexico peso 17.2503 -0.51 Chile peso 959.31 0.14 Colombia peso 3202.5 -1.39 Peru sol 3.3561 0.56 Argentina peso (interbank) 1510.5 0.00 Argentina peso (parallel) 1530 1.63 (Reporting by Avinash P in Bengaluru; Editing by Alistair Bell) ((Avinash.P@thomsonreuters.com;)