Markets rattled as Peru leftist claims victory

Trade was halted on the Lima stock exchange and world silver prices spiked Monday, as markets gave a quick and negative reaction to a leftist's apparent victory in Peru's presidential vote. Ex-military man Ollanta Humala claimed victory after Sunday's poll, raising fears of Venezuela-style upheaval in a country that is a vital supplier of precious metals to the global market.
In the run-up to the vote Humala had promised to share out Peru's mineral wealth - including gold, silver and copper - while playing down his former ties to Venezuelan President Hugo Chavez. Humala had a slight lead over his right-wing rival Keiko Fujimori, of 50.09 to 49.91 percent, according to the partial official results released Sunday. Global investors did not wait for official poll results to cast their vote, dumping Peruvian stock and prompting regulators in Lima to halt trading. The stock market lost a whopping 8.7 percent before the freeze.
Trade was "suspended until 11:00 (1600 GMT) after a sharp drop in the general index," said the Bolsa de Valores, which expressed hope the move would allow traders to "understand properly what is happening and take better decisions." In the minutes after the market reopened, the general index fell further, posting a 10.9 percent loss so far for the day. The picture was scarcely more positive in markets outside Peru. In London, silver prices rose 2.4 percent to $37.09 per troy ounce.
Peru is the world's biggest producer of silver, second-largest producer of copper - after neighbouring Chile - and a major producer of gold, zinc, lead, bismuth and tin. "The concerns associated with a Humala victory focus mainly on the possibility of increased government intervention in the economy, including the nationalisation of 'strategic economic sectors,' a key feature of Mr Humala's original government plan," said analysts at Barclays Capital.
Peruvian mining companies were among the biggest losers. Shares in copper producer Sociedad Minera lost 14.4 percent, while silver producer Buenaventura lost 13.8 percent by 1620 GMT. Both are among Peru's top five companies by market value.