(Updates prices)
By Bruno Federowski
BRASILIA, Jan 23 (Reuters) - Latin American currencies weakened on Tuesday as concerns over potential U.S. protectionism lifted the U.S. dollar from an early-year selloff.
U.S. President Donald Trump slapped steep tariffs on imported washing machines and solar panels on Monday, measures that some feared could be just the beginning of a wider protectionist swing.
China and South Korea condemned the measure, with Seoul set to complain to the World Trade Organization (WTO) over the "excessive" move. The increased tensions drove traders to book profits on risky assets, fearful that the tariffs could weigh on global growth. High-yielding assets had kick-started the year with a rally in the wake of stronger-than-expected activity figures worldwide.
"Risk aversion appears to be dominating as market participants consider the implications of an escalation in trade tensions between the U.S. and China," analysts at Scotiabank wrote in a client note.
The Mexican , Colombian and Chilean pesos all weakened.
Mexico's currency was particularly vulnerable to protectionism talk as negotiations over the North American Free Trade Agreement (NAFTA) dragged on.
A Reuters poll showed the peso would take a bigger hit if U.S. President Donald Trump kills NAFTA than from an election victory for the country's left-wing presidential hopeful. Meanwhile, investors in Brazil were cautious ahead of the trial of former President Luiz In??cio Lula da Silva, who is leading voting intention polls for this year's elections.
Lula has vowed to reverse part of President Michel Temer's reform agenda if elected, but he could be barred from running if a higher court upholds his conviction for corruption at trial on Wednesday. Brazil's Bovespa stock index fell 1.22 percent on profit-taking after recent highs. Shares in iron ore miner Vale dropped 4.17 percent.
Key Latin American stock indexes and currencies at 2155 GMT:
Stock indexes LatestDaily YTD pct
pctchange
changeMSCI Emerging Markets1,251.711.076.91 MSCI LatAm 3,049.07 -1.299.22Brazil Bovespa 80,678.35 -1.225.60Mexico IPC 50,295.030.641.91Chile IPSA 5,799.81 -0.484.23Chile IGPA 29,154.83 -0.454.20Argentina MerVal 33,939.671.24 12.89Colombia IGBC 12,065.520.736.11Venezuela IBC 2,520.324.33-92.05
Currencies Latest Daily YTD pct
pctchange
changeBrazil real 3.23400.112.45Mexico peso 18.7225 -0.205.22Chile peso 608.82 -0.650.96Colombia peso 2,856.05 -0.204.41Peru sol 3.219 -0.190.56Argentina peso (interbank)19.3350 -0.97 -3.80 Argentina peso (parallel) 19.83 -0.15 -3.03 (Reporting by Bruno Federowski; Editing by Jonathan Oatis, Nick Zieminski and Cynthia Osterman)
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