EMERGING MARKETS-Latam stock indexes down, Brazil banks weigh

* Brazil personal credit tax weighs on banks

* Foreign investors seen cautiously returning

* Brazil Bovespa down 0.47 pct, Mexico IPC off 0.23 pct

By Luciana Lopez and Michael O’Boyle

SAO PAULO/MEXICO CITY, April 8 (Reuters) – Regional indexes
across Latin America slipped on Friday as a hike on personal
credit in Brazil weighed on banks, but the return of foreign
investors could signal more gains in coming weeks.

The MSCI Latin American stocks index (.MILA00000PUS: Quote, Profile, Research) edged
up 0.5 percent on Friday, despite weak markets throughout the
region.

In Brazil the government’s attempts to clamp down on credit
to fight worrisome inflation hurt banking shares, which led the
Bovespa stock index (.BVSP: Quote, Profile, Research) down 0.47 percent. For details, see
[ID:nN07255298]

Shares of Itau Unibanco (ITUB4.SA: Quote, Profile, Research), the country’s largest
private sector bank by assets, fell 23 percent, with rival
Bradesco (BBDC4.SA: Quote, Profile, Research) losing 2.4 percent. Shares of Banco do
Brasil (BBAS3.SA: Quote, Profile, Research), Latin America’s largest bank by assets,
dropped 1.75 percent.

But analysts said the effects of the tax on bank stocks
would likely be short-lived, with a drop in Friday’s session
opening space for more gains to come.

“This isn’t going to bring major changes to bank profits in
Brazil,” said Fabio Cardoso, a partner at Adinvest in Rio de
Janeiro. “In the medium-term, this will have a null effect.”

Cardoso also noted that some smaller, less liquid stocks
have advanced in recent sessions. That suggests investors are
looking beyond short-term gains to a longer horizon, he said.

Data on fund flows showed global investors were looking
back at Latin American stocks after pulling out funds through
most of the first quarter.

For the week ended April 6, funds reporting on a weekly
basis show investors pumped an additional $129.7 million into
U.S. domiciled equity funds with a Latin American focus,
according to Lipper, a Thomson Reuters service.

That marks a turnaround after eleven weeks that showed
mostly outflows and only two weeks of slight inflows.

Foreign flows to Latin America turned positive in the last
week of March, based on EPFR Global data.

Mexico’s IPC stock index (.MXX: Quote, Profile, Research) eased 0.23 percent to
37,386 points, extending a pullback in the previous session.

But the upcoming earnings season in the United States —
the world’s largest economy, which consumes about 80 percent of
Mexico’s exports — could buoy those equities next week.

Chart analysts see further gains ahead, looking at short
term targets of 38,000 and 38,500 points.

Shares of America Movil (AMXL.MX: Quote, Profile, Research), one of the world’s
biggest telecommunications company, led losses, down 1.5
percent.

Chile’s IPSA index (.IPSA: Quote, Profile, Research) dropped 0.67 percent, adding to
losses in the previous session. Earlier in the week the IPSA’s
relative strength index, a technical indicator used to gauge
momentum, suggested those stocks could be overbought. The RSI
has since pulled back from that level.

Retailers led losses, with Falabella (FAL.SN: Quote, Profile, Research) down 0.9
percent and Cencosud (CEN.SN: Quote, Profile, Research) down 0.88 percent.

EMERGING MARKETS-Latam stock indexes down, Brazil banks weigh