EMERGING MARKETS-Latin American stocks, FX drop as US tariffs on China to take effect

By Johann M Cherian and Lisa Pauline Mattackal

April 8 (Reuters) - A brief recovery in most Latin American stocks and currencies reversed course on Tuesday as the U.S. moved ahead with tariffs on China, heightening fears of slowing global growth.

The United States said that 104% duties on imports from China will take effect at 12:01 a.m. Eastern Time on Wednesday, even as President Donald Trump's administration moved to quickly start talks with other trading partners.

Still, the White House reiterated that country-specific tariffs of up to 50% would also take effect at midnight as planned.

The move hit hopes for negotiations between the world's two largest economies.

China's offshore yuan CNH=D3 fell nearly 0.9% against the dollar, to its lowest since it began trading in 2010.

MSCI's gauge for Latin American stocks .MILA00000PUS fell 2.3%, while an index tracking currencies .MILA00000CUS lost 1.6%. Both indexes recorded a third consecutive session of losses.

"The U.S. will have a very difficult time negotiating with China ... we expect to continue to see a volatile market," said Stephen Dover, chief market strategist at Franklin Templeton.

Global markets had bounced higher earlier in the session after Monday's selloff, but fell back later in the day.MKTS/GLOB

MSCI's index of global emerging market stocks .MSCIEF, of which Chinese equities make up the biggest holdings, was down 0.1% after it recorded its worst day since 2008 on Monday.

Latin American currencies fell broadly. Brazil's real BRBY led declines, falling 1.4% to an over two-month low against the dollar.

Data showed Brazil's public sector gross debt rose to 76.2% of gross domestic product in February from the previous month, driven by the country's heavy interest burden.

Dollar bonds across Latin America lost ground, with Colombia's 2044 maturity US195325BR53=TE down 1.9 cents and Mexico's 2044 bond US91086QBB32=TE falling over 2.2 cents, as per Tradeweb data.

Chile's peso CLP= briefly weakened past 1,000 per dollar for the first time since late January, as prices of its top export copper fell on worries that slowing growth, particularly in top consumer China, would hit demand.

Still, Latin American assets have been spared the worst of the selloff that has gripped global markets since Trump's "Liberation Day."

"Except Mexico and parts of Central America, most of the (Latin American) countries do not have a big exposure to trade with the U.S.," said Eduardo Ordonez Bueso, an emerging markets debt portfolio manager at BankInvest, adding this was an argument for emerging market funds to add exposure to the region.

Oil prices reversed gains, weighing on energy stocks. Colombia's Ecopetrol ECO.CN slumped 7.7%, its worst day since May 2023, dragging the COLCAP .COLCAP index down 3.2%.

A report, citing diplomatic sources, said the board of the International Monetary Fund (IMF) could discuss a pending loan deal with Argentina in a Friday meeting.

HIGHLIGHTS

China, US clash over major Argentina currency swap line

Colombia's inflation rose less than expected in March

Limited options push China into trade 'war of attrition' with Trump

Key Latin American stock indexes and currencies at 1950 GMT: