EMERGING MARKETS-Latam assets fall as US economy shrinks in Q1; Colombia central bank cuts rates

By Shashwat Chauhan and Nikhil Sharma

April 30 (Reuters) - Most Latin American assets slid on Wednesday as investor sentiment took a hit following worse-than-expected U.S. GDP data, while focus was also on Colombia where the central bank cut interest rates in an unexpected move.

Gross domestic product decreased at a 0.3% annualized rate last quarter, as businesses rushed to buy imported goods to avoid higher costs, stressing the disruptive nature of President Donald Trump's often chaotic tariff policy.

"I would characterize today as a classical risk-off day where the U.S. dollar behaves as a safe-haven," said Olga Yangol, head of EM research and strategy at Credit Agricole.

"There could be a slowdown in growth, potentially even lasting more than one quarter, but it's not something that we see as an indicator of the U.S. economy falling into recession."

Colombia's peso COP= led losses in the region, down 1.6% after its central bank unexpectedly cut its benchmark interest rate by 25 basis points to 9.25% amid ongoing inflationary pressures, fiscal difficulties and a cloudy global economic outlook.

In Mexico, preliminary data showed the economy performed better than expected in the first quarter — the quarter-on-quarter growth showed the economy avoided a technical recession.

The peso MXN= depreciated 0.3% against the dollar, while the U.S. dollar index USD= rose 0.4%.

MSCI's index for regional currencies .MILA00000CUS shed 0.3% on the day, but was on track for a fourth successive monthly rise. A gauge for regional stocks .MILA00000PUS dropped 0.4% but up almost 6% for April.

Latin American assets have evaded sharp selling pressures this year as a result of relatively lower U.S. import tariffs on the South American countries.

Global assets, conversely, have succumbed to heightened uncertainty over Trump's erratic tariff maneuvers and brewing trade tensions with China.

World's biggest copper producer Chile's currency CLP= dipped 0.2%, tracking a drop in red metal prices after a survey showed contraction in top consumer China's factory activity.

Overnight, Chile's central bank held its benchmark interest rate at 5%.

Brazil's real BRL= weakened almost 1%. Labor Ministry data showed Brazil's economy created fewer-than-expected net 71,576 formal jobs in March, its weakest figure for the month since 2020.

Sovereign international bonds of most frontier nations fell in conjunction with the global selloff, with longer-dated maturities in Gabon, Nigeria, Kenya, Sri Lanka and El Salvador down more than 1 cent on the dollar, according to Tradeweb data.

The iShares JPMorgan Emerging Markets Bond ETF EMB.O, which tracks the widely used EM bond index developed by JP Morgan, fell 0.5% — on pace to snap a six-day winning streak.

Shares of Mexico's largest broadcaster Grupo Televisa TLEVISACPO.MX dropped 2.6% after reporting a 66% net profit drop in the first quarter. The world's largest tequila producer, Becle CUERVO.MX added 2.2% after reporting a 15% rise in first-quarter profit.

Elsewhere in emerging markets, Pakistan's international bonds continued to slide amid rising tensions with neighbor India, with the 2031 maturity XS2322319638=TE down more than 1.4 cents on the dollar.

Most domestic markets in Latin America will remain closed on Thursday on account of Labor Day.

Key Latin American stock indexes and currencies: