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EMERGING MARKETS-Latam stocks track broader rally; Brazil's real dips

    * Real drops as economic outlook deteriorates
    * Colombian central bank minutes expected
    * Brazilian, Mexican manufacturing PMI come off record lows
in May

 (Adds details, updates prices)
    By Susan Mathew and Ambar Warrick
    June 1 (Reuters) - Latin American stocks rose on Monday,
tracking their global peers amid some relief over Sino-U.S.
tensions, while Brazil's real fell on further concerns over the
country's economic outlook.
    The MSCI's index of regional shares  rose
2.6% as Washington stopped short of imposing new tariffs or
sanctions on Beijing and left their so-called Phase 1 trade deal
intact while responding to China's new security law on Hong
Kong. 
    But sources said China has asked state-owned firms to halt
purchases of soybeans and pork from the United States, after
U.S. President Donald Trump moved to revoke Hong Kong's special
status under U.S. law. 
    Still, the lack of any immediate escalation in tensions saw
Brazilian stocks add 1.7%, while those in Mexico
and Chile rose 2.3% and 1.5%, respectively.
    Surging iron ore prices buoyed Brazilian mining giant Vale
, while planemaker Embraer SA rose after it
said China and India could be new partners after its deal with
Boeing Co fell apart.
    Brazil's real fell 0.9% after a central bank survey
showed the 2020 outlook for the economy deteriorated for a 16th
week in a row, to a new consensus of a 6.25% contraction. 

    Still, data showed manufacturing activity in Latin America's
largest economy improved slightly in May from record lows,
pointing to some headway in an eventual, but arduous recovery
from disruptions caused by the coronavirus outbreak.

    Mexico's peso firmed 0.4% as the country's
manufacturing sector showed a similar trend as Brazil in May.

    Chile's peso traded higher tracking gains in the
price of copper, the country's top export.
    Colombia's peso traded slightly higher to the dollar,
while stocks added more than 1% ahead of the central
bank's minutes from its May 29 policy meeting, when it had cut
interest rates to a record low 2.75%.
    "Given the severe negative economic impact, downside risks
to inflation, and favorable exchange rate dynamics, we continue
to believe the MPC (Colombia's Monetary Policy Committee) will
cut the policy rate further to a 2.25% terminal level," Goldman
Sachs analysts wrote in a note.
    "However, while we see another 50bp cut in June as the most
likely next step, the latest split decision has increased the
risk of a smaller 25bp cut at the next meeting."
    A rash of fiscal and monetary policy support has helped
emerging markets rally from March lows on hopes of an economic
recovery.
    
    Latin American stock indexes and currencies:
    
    Stock indexes             Latest      Daily % change
 MSCI Emerging Markets          951.67                2.29
                                        
 MSCI LatAm                    1820.04                2.56
                                        
 Brazil Bovespa               88900.01                1.71
                                        
 Mexico IPC                   36972.46                2.35
                                        
 Chile IPSA                    3700.67                1.45
                                        
 Argentina MerVal             39330.22                3.98
                                        
 Colombia COLCAP               1109.50                1.25 Currencies             Latest      Daily % change
 Brazil real                    5.3880               -0.91
                                        
 Mexico peso                   22.0735                0.43
                                        
 Chile peso                      793.5                1.64
                                        
 Colombia peso                 3718.57                0.20
 Peru sol                       3.4197                0.21
                                        
 Argentina peso                68.6200               -0.12
 (interbank)                            
                                        
 
 (Reporting by Susan Mathew in Bengaluru; editing by Grant
McCool and Tom Brown)
  
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