BRASILIA: The Brazilian real led losses in Latin America as lingering concerns over presidential elections overshadowed a largely positive environment for emerging market assets.
Investors have been increasingly fearful that the winner of October's election may not commit to an unpopular agenda of deficit-cutting and privatizations that they see as critical to bringing back Brazil's investment grade sovereign rating.
Several polls have showed jailed former President Luiz In?cio Lula da Silva, who has railed against austerity, leading the ballot, with market favorite Geraldo Alckmin failing to pick up steam.
The Brazilian real weakened 1.3 percent, by far the biggest decliner in the region.
"If the foreign scenario today weren't as favorable to emerging markets, the real's decline would have been even steeper," said Correparti brokerage head of currency trading Ricardo da Silva.
MSCI's emerging market index rose 1.8 percent, reflecting a pick-up in appetite for risky assets after the United States and Mexico reached a trade deal that could replace the North American Free Trade Agreements.
Canada's top trade negotiator joined her Mexican and US counterparts in Washington on Tuesday in a bid to remain part of a trilateral North American trade pact, as US officials expressed optimism a deal could be reached this week.
Thorny negotiations around NAFTA, which have dragged on for much longer than originally envisioned, have weighed on demand for emerging-market assets throughout the year.
The Mexican peso fell 0.9 percent as investors booked profits from the previous day's rally.
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