EMERGING MARKETS-Latam stocks, currencies slide on global slowdown worries

By Johann M Cherian

April 7 (Reuters) - Currencies and stocks of major resources-rich Latin American economies joined a global market selloff on Monday, on worries that U.S. President Donald Trump's firm stance on sweeping tariffs could damage the global economy.

MSCI's index tracking equities in the region .MILA00000PUS fell 2.9% and was on track for its biggest two-day drop since the market selloff following the COVID pandemic.

Trump on Monday threatened to impose an additional 50% tariff on Chinese goods starting on April 9 if Beijing does not withdraw 34% increase that Beijing had slapped on U.S. imports, in response to U.S. reciprocal tariffs last week. The offshore yuan CNH= was down 0.6%.

Volatility was high with investors looking for any signs that Trump could offer a respite on his aggressive stance on trade policy after he said multiple countries were looking to strike deals with the U.S..

Currencies, stocks and commodity prices witnessed sharp swings after a CNBC report showed White House adviser Kevin Hassett said that Trump was considering a 90-day pause in tariffs for all countries except China, before the White House called the comment as "fake news".

Resources exports are a top source of revenue for Latin American economies and prices of crude oil, iron ore and copper have been taking a hit as investors priced-in the likelihood that a slowing economy could depress demand for the commodities.

"The much greater problem for markets and policymakers would be a permanent negative shift in the global GDP trend growth rate (and earnings growth rate) coming from deglobalization," said Thierry Wizman, Macquarie Group's global foreign exchange and rates strategist.

Worries of a global recession have also spurred investors to add on to bets that the U.S. Federal Reserve could deliver at least five 25 basis points interest rate cuts this year, according to data compiled by LSEG.

Brazilian oil giant Petrobras PETR4.SA lost 3.5%, while Colombia's Ecopetrol ECO.CN and Argentina's YPF YPFDm.BA lost 1.5% and 0.4%, respectively as prices of crude oil traded close to $60/ barrel.

Brazilian mining giant Vale VALE3.SA fell 1.2%, while U.S.-listed shares of Chile's SQM SQM.N lost 2.3%.

A gauge for currencies .MILA00000CUS weakened 1.3% against a stronger dollar and was on pace for its steepest two-day decline since April 2022.

Mexico's peso MXN=, the most sensitive to tariff headlines in the region, depreciated 1.3% and was last at 20.6 to the dollar. The local stock index .MXX dropped 1.1%.

President Claudia Sheinbaum said that her government would like to avoid imposing reciprocal tariffs on the U.S., though she said it could not be ruled out.

Iron ore exporter Brazil's real BRL= weakened 1.3%, while the local Bovespa index .BVSP lost 1.3%.

At a time when most emerging market stocks and currencies have witnessed sharp losses, assets in Latin American have witnessed relatively moderate declines as U.S. tariffs on the region have been lower in comparison and Trump retained exemptions on Mexican imports under a continent-wide free trade environment.

Focus will be on any retaliatory measures announced by regional governments after Brazil sought to pass a bill to tariff all U.S. imports last week.

Currencies of copper exporters Chile CLP= and Peru PEN= slipped 1.3% and 0.1%, respectively, while Chilean stocks .SPIPSA lost 2.2% and those of Peru .SPBLPGPT were flat.

Chile's central bank said that the only plausible option at its March meeting was keeping the benchmark interest rate on hold at 5% due to risks facing the inflationary outlook.

Colombia's peso COP= depreciated xx%. Woes around domestic fiscal issues also weighed on the mood after the oil exporter said it will seek new financing from international markets and multilateral banks to address the challenges.

Argentina's Merval index .MERV slid 1.3%.

In central and eastern Europe, Poland's Warsaw Stock Exchange .WIG20 resumed trading and was last down 1.5% after the bourses suspended trading on all markets for one hour, citing "security of trading".

Key Latin American stock indexes and currencies at 1538 GMT: