Latin American stocks edged upward in a session marked by thin volume on Friday as investors closed their books and warily eyed 2012. The MSCI Latin American stock index added 0.05 percent, though the index was down about 21 percent for the year after fears of a widening European debt crisis turned investors away from riskier assets in 2011.
"Because of Europe everyone is nervous about the first quarter," said Patricia Berry, a strategist at brokerage Intercam in Mexico City. Market players are awaiting a verdict from ratings agency Standard & Poor's, which put nearly the entire eurozone on a downgrade warning this month. They will also keep their eyes on an upcoming French debt auction as investors remain nervous about debt-laden European countries' ability to handle their finances.
Banks snapped up cheap loans last week after the European Central Bank injected nearly half a trillion euros into the market in a bid to ease a growing credit crunch. Some hoped the unprecedented injection of funds would boost the purchases of debt, but an auction on Thursday of 10-year bonds in Italy was disappointing, with investors demanding yields of nearly 7 percent. "It's already very evident Europe is in recession and nobody really knows the impact in terms of GDP that is going to have on China and the United States," Intercam's Berry said.
Brazilian markets were closed for the New Year holiday. Mexico's IPC index fell 0.29 percent but was down about 3 percent for the year. The United States is Mexico's biggest trading partner and investors have been cheered by signs the economy of its northern neighbour is gaining momentum. America Movil, controlled by Mexican billionaire Carlos Slim, slipped 0.38 percent but was offset by retailer Wal-Mart de Mexico, which added 0.53 percent. Chile's IPSA index advanced 0.13 percent but ended the year down 15.2 percent.
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