EMERGING MARKETS-Latam stock indexes down but inflows eyed

* Brazil personal credit tax weighs on banks

* Foreign investors seen cautiously returning

* Brazil Bovespa down 0.66 pct, Mexico IPC flat pct
(Adds graphic on fund flows, comments and closing prices)

By Michael O’Boyle and Luciana Lopez

MEXICO CITY/SAO PAULO, April 8 (Reuters) – Regional stock
indexes across Latin America slipped on Friday as a tax hike on
personal credit in Brazil weighed on banks.

At the same time, analysts said an increase in foreign
capital flows could fuel gains in coming weeks as investor
sentiment recovers somewhat from recent unrest in the Arab
world and Japan’s nuclear crisis.

Data on fund flows showed global investors were returning
to Latin American stocks after pulling out capital during most
of the first quarter.

“Risk appetite is in general picking up,” said Kathryn
Rooney Vera, an analyst at Bulltick Capital Markets in Miami.

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.
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For a graph on fund flows: http://r.reuters.com/raw88r
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But on Friday, the Brazilian government’s clamp down on
credit to fight inflation hurt banking shares, which led the
Bovespa stock index (.BVSP: Quote, Profile, Research) down 0.66 percent. For details, see
[ID:nN07255298]

Brazilian stocks fell almost 0.9 percent during the week,
their first weekly dip after a three weeks rally.

Shares of Itau Unibanco (ITUB4.SA: Quote, Profile, Research), the country’s largest
private sector bank by assets, fell 2.08 percent, with rival
Bradesco (BBDC4.SA: Quote, Profile, Research) losing 2.11 percent.

Chile’s IPSA index (.IPSA: Quote, Profile, Research) dropped 0.6 percent.

WELL POSITIONED

Technical indicators on regional stock indexes suggested
stocks could snap back after investors booked profits this week
on a recent surge that had pushed the the MSCI Latin American
stocks index (.MILA00000PUS: Quote, Profile, Research) up to its highest since June 2008
this week.

Also, some investors say Latin America is relatively well
positioned to weather high oil prices because much of the
region produces crude. That could make Latin American stocks
more attractive.

“If oil stays high for a long period of time, people will
have to change their growth forecast for the United States.
Latin America, depending on which country you are looking at,
is generally not affected by higher oil prices,” said Nicholas
Morse, who helps manage Latin American equities at Schroder
Investment Management in London.

The MSCI Latin American index rose 0.37 percent as its key
components companies rose despite overall losses in regional
indexes.

But analysts said that the drop could open space for
further gains in coming sessions. The Bovespa’s 14-day simple
moving average was rising above moving averages for longer
terms and momentum indicators also pointed to further gains.

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.”

Mexico’s IPC stock index (.MXX: Quote, Profile, Research) closed flat for the day and
down 0.8 percent for the week.

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, shed 0.9 percent.

Chilean stocks were nearly flat for the week after stocks
retreating from levels that the relative strength index, a
technical indicator of momentum, suggested were overbought.

Industrial conglomerate Copec (COP.SN: Quote, Profile, Research) lost 2.11 percent
and retailer Falabella (FAL.SN: Quote, Profile, Research) fell 1.34 percent.
(Additional reporting by Daniel Bases in New York; Editing by
Diane Craft)

EMERGING MARKETS-Latam stock indexes down but inflows eyed