EMERGING MARKETS-Brazil’s real slips 1% as rate hikes fuel recovery worries

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    * Rate hikes to hamper recovery -Brazil Economy Minister
    * Brazil's real top Latam weekly performer
    * Cosmetics maker Natura slumps on weak results

 (Updates prices and market details)
    By Shashank Nayar and Ambar Warrick
    Nov 12 (Businesshala) - Brazil's real slipped from a more-than
one-month high on Friday after the Economy Minister said that
rising interest rates would hamper economic recovery, while
Mexico's peso rose on the central bank hiking interest rates. 
    The real slumped 1% after the comments from
the minister, Paulo Guedes. Brazil's policy rate has been hiked
by a total of 575 basis points this year to combat inflation,
with more hikes slated.
    Data also showed Brazilian service sector activity slowed in
September.
    With elections due next year, investors have been wary of
populist policies from President Jair Bolsonaro, who could be up
against former president Luiz Inacio Lula da Silva. 
    Uncertainty over the Senate's passage of an amendment for
larger fiscal spending has also weighed on sentiment. 
    Still, a jump in iron ore prices put the real on track for
weekly gains of more than 1%. Chile's peso was also set
for similar gains, tracking strength in copper prices amid some
relief over China's property market, which is a major driver of
metal demand. 
    Brazil's benchmark stock index slipped 1.2% with
cosmetics maker Natura & Co sliding 16% after it
reported a drop in quarterly net income. It also announced a new
share buyback program and potential plans to list its shares in
New York.
    Planemaker Embraer SA dropped 7% after the
Brazilian government unilaterally cut by 25% the value of KC-390
military cargo aircraft contracts.
    "Political uncertainty, coupled with increased government
spending and a 10% rise in YoY inflation, have caused much
strife for Brazilian equities over the past two months,"
Thornburg Investment Management said in a note. 
    "We have significantly trimmed our exposure to companies in
the country, going from about 8% during the summer to about 3%."
    Most other currencies in the region were set to fall or make
mild gains for the week after the U.S. dollar edged higher as
surprisingly strong U.S. inflation prompted investors to advance
their bets on a U.S. rate hike to as early as mid-2022.
    Falling oil and copper prices weighed on the Colombian
 and Chilean pesos.
    Central banks in Peru and Mexico raised interest rates this
week to combat higher inflation.
    Mexico's peso gained around 0.5% after its central
bank hiked rates by 25 basis points on Thursday, as expected.
Peru's sol fell 0.1% after its central bank hiked rates
by 50 bps to 2% after market hours on Thursday.
    
    Latin American stock indexes and currencies:    
                              Latest      Daily % change
 MSCI Emerging Markets         1285.09                0.29
                                        
 MSCI LatAm                    2188.30               -1.46
                                        
 Brazil Bovespa              106311.66               -1.19
                                        
 Mexico IPC                   51456.45               -0.48
                                        
 Chile IPSA                    4502.28               -0.38
                                        
 Argentina MerVal             94398.84               -1.61
                                        
 Colombia COLCAP               1356.95               -0.65 Currencies             Latest      Daily % change
 Brazil real                    5.4592               -1.04
                                        
 Mexico peso                   20.5286                0.51
                                        
 Chile peso                     799.95               -0.85
                                        
 Colombia peso                 3880.33               -0.10
 Peru sol                       4.0092               -0.08
                                        
 Argentina peso               100.2000                0.01
 (interbank)                            
                                        
 
 (Reporting by Shashank Nayar and Susan Mathew in Bengaluru;
Editing by Alexander Smith and Grant McCool)
  
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