May 27 (Reuters) - Brazil's real extended gains for a sixth session on Wednesday while other Latin American currencies weakened as worries about escalating U.S.-China trade tensions dented risk appetite.
Latam stocks, meanwhile, joined a rally in world stocks on hopes of an economic recovery as countries reopened businesses following pandemic-driven lockdowns.
Regionally, Mexico's auto industry picked up pace, with Fiat Chrysler and BMW AG joining peers in gradually dusting off operations.
Mexican shares extended gains to a fourth session, while Brazil's index jumped 1.4%. MSCI 's index of Latam shares hit a 10-week high and was up 1.6%.
"The stock market is pricing in a faster than expected economic recovery," said Andrew Smith, chief investment strategist of Delos Capital Advisors, but he warned of more
violatility as economic activity picks up.
But, investors kept a close eye for new U.S. action against China after U.S. President Donald Trump said Washington would respond strongly this week against Beijing's move to impose a proposed security law on Hong Kong. Any escalation would hammer a global economy already on track for a deep recession.
Analysts have been expecting commodity prices to pick up in the second half of the year, which could see regional markets outperform by year-end. But as China is a major destination for Latam's commodity exports, further sanctions or tariffs could
derail the trajectory.
As oil prices fell, Mexico's peso was knocked off 10-week highs, while the Colombian peso came off highs since early March. Falling copper prices saw Chile's currency fall 1.2%.
Brazil's real jumped 1%, extending gains after the country posted a record current account surplus in April on Tuesday.
"We believe the current account deficit will keep shrinking, amounting to around $7 billion this year, i.e., 0.5% of GDP," said Citigroup EM FX strategists in a note.
The currency has gained about 7.8% over the last six sessions, reducing yearly losses to about 24%, although political uncertainty remained with the health crisis worsening.
Economy Ministry officials said Brazil's government is moving closer to getting emergency financial support via credit guarantees to small-, medium- and micro-sized businesses to help them tide over the pandemic-driven slump in economic activity.
Argentina's peso fell to new lows after Fitch and S&P downgraded ratings as the country defaulted for the ninth time last week. But hopes remained that a restructuring deal could be reached soon.

Sumber : Reuters.com