EMERGING MARKETS-Latam stocks rally, FX barely gains on dollar weakness

    * Stocks recover from 16-year low
    * Mexican peso bounces back from record low
    * Stocks, FX still substantially down for the month

 (Adds details on rally, updates prices)
    By Ambar Warrick and Susan Mathew
    March 24 (Reuters) - Latin American stocks shot up on
Tuesday, joining a broader rally in risk assets as investors
hoped for recent stimulus measures to provide a degree of
stability, although the outlook remained bleak on the virus
    Regional stocks found their footing as Wall Street indexes
jumped on signs the U.S. Senate is nearing a deal on a $2
trillion economic rescue package. 
    Brazil shares surged 10%, recovering from their
worst close since 2017. MSCI's index of regional stocks
 climbed from 16-year lows.
    Mexican equities rose more than 5%, while Chilean
stocks were flat. 
    However, the day's gains were a fraction of what has been
lost over a month-long rout, as fears of the pandemic prompted a
mad dash for safe havens.
    The MSCI stock index is down roughly 37% in March so far and
is set for its worst monthly loss ever. 
    Regional currencies slightly capitalized on weakness in the
dollar after the U.S. Federal Reserve committed to buy an
unlimited number of bonds.
    The Mexican peso came off a record low, while
Brazil's real and Chile's peso both strengthened.
    "Essentially, markets are trading in 'capital preservation'
rather than 'capital appreciation' mode," said Christian
Lawrence, senior market strategist at Rabobank.
    "The sell-off in EM currencies isn’t just a case of EM
weakness, however, dollar strength has played a significant role
as the greenback has gained ground against just about everything
    Brazil's real, which had been steadily hitting new lows even
before the outbreak due to flailing fundamentals, has losses of
almost 21% so far this year. It is one of the worst-performing
among commonly watched emerging market currencies, outdone by
oil exporter Russia's ruble and Mexico's peso.
    Mexico's currency hit yet another all-time low of 25.444
during Asian hours but recovered some ground, putting it on
track for its first day of gains in 10. 
    The pandemic has also pushed currencies of Colombia
and Chile to lifetime lows recently as oil and copper prices
have tanked. Rising oil prices on Tuesday helped crude producer
Colombia's currency rise 1.6%. Late on Monday, its central bank
said it could buy $2.94 bln in debt to boost liquidity.

    For the day, MSCI's index of Latin American currencies
 rose slightly from its weakest close in four
    Argentine markets were closed for a holiday. 
    Key Latin American stock indexes and currencies at 1950 GMT:
    Stock indexes             Latest      Daily % change
 MSCI Emerging Markets          803.55                5.98
 MSCI LatAm                    1507.82                9.03
 Brazil Bovespa               70316.20               10.61
 Mexico IPC                   34731.01                5.36
 Chile IPSA                    2894.74               -0.11
 Colombia COLCAP                913.62               -0.65 Currencies             Latest      Daily % change
 Brazil real                    5.0863                0.97
 Mexico peso                   24.9204                1.68
 Chile peso                      845.2                1.81
 Colombia peso                 4109.88                1.66
 Peru sol                       3.5188                0.37
 (Reporting by Susan Mathew in Bengaluru; Editing by Dan