EMERGING MARKETS – Latin American currencies fall as China worries about reducing risk appetite

* S&P revises Hungary’s outlook to ‘negative’ from ‘stable’ * China unexpectedly cuts key rates amid disappointing economic data * Brazil’s Petrobras to cut gasoline prices by 4.9% from (price updates; adds bullet points, comments, details) By Susan Mathew and Anisha Sircar, Aug 15 (Reuters) – The Brazilian real and Mexican peso fell against the dollar on Monday, following other currencies emerging markets as concerns over China’s economic growth dampened risk appetite, while the Hungarian forint was poised for its worst session since May against the euro. The forint’s 1.7% decline was triggered by S&P lowering Hungary’s credit rating outlook from stable to negative. S&P said external risks, including potential cuts to European Union funds and reduced gas flows, could weigh on Hungary’s growth outlook, already under pressure from soaring inflation and fiscal adjustment to contain the budget deficit. The forint has fallen more than 7% year-to-date, far underperforming other Central and Eastern European currencies. A broader basket of emerging market currencies is down about 4%. Global sentiment took a hit on Monday after weak retail sales and factory activity in China raised concerns about slowing growth in the world’s second-largest economy, prompting its central bank to cut a key rate to stimulate demand. This sent the safe haven dollar rallying. “The first impression from the latest round of activity data for July is that there are few signs of a strong rebound in the (Chinese) economy,” said Charlie Lay, FX and EM analyst at Commerzbank. “Consumer sentiment is expected to remain fragile given uncertainties about future outbreaks and shutdowns. Additionally, the economy is still grappling with the housing correction and generally weak investment.” China is a major destination for commodity exports from resource-rich Latin America. The Brazilian real lost 0.5% after three weeks of gains. Investors appeared to be looking past data showing economic activity rose more than expected in June, helped by a rebound in the services sector from the impact of the COVID-19 pandemic. The head of the country’s central bank defended policymakers’ focus on 12-month inflation to March 2024, helping signal that the bank may be done raising interest rates. Brazilian stocks edged up 0.2%. Oil company Petrobras rose 0.4% after saying it would cut gasoline prices at the refinery by 4.9% from Tuesday, while Vale fell 2%. The miner was fined around 86.3 million reais ($16.82 million) after the country’s comptroller general ruled that the company had failed to present truthful information on the conditions of its tailings barrage of Brumadinho before the 2019 disaster. The Mexican peso lost 0.1%, snapping a five-game winning streak. Most other markets in Latin America were closed for local holidays. Key Latin American Stock Indices and Currencies at 1900 GMT: Stock Indices Latest MARKETS MSCI MSCI MSCI DUVERT Daily % Change Brazilian Real 5.0979 -0.49 Mexican Peso 19.8743 -0.23 Chilean Peso 873.9 0, 00 Colombian Peso 4157.13 -0.02 Peruvian Sol 3.8491 0.00 Argentine Peso 134.5800 -0.23 (interbank) Argentine Peso 290 2.41 (parallel)