* Brazil real touches lowest level since May 22 * U.S. dollar hit session high on release of Fed minutes * No new high-level U.S.-China talks scheduled * Latam stock indexes fall between 0.4% and 1% (Updates prices throughout) By Susan Mathew and Shreyashi Sanyal Aug 19 (Reuters) - Brazil's real languished at its lowest level in nearly three months on Wednesday, pressured by a firming dollar on the release of minutes from the U.S. Federal Reserve's recent meeting, while heightening U.S.-China tensions also weighed. Brazil's real fell as much as 1.3% to 5.53 against the dollar, while stocks in Sao Paulo dropped after their best day in 10-weeks on Tuesday after Economy Minister Paulo Guedes silenced speculation about his departure. The country has seen a slew of ministerial resignations in the past few months over differences with the administration, increasing political uncertainty and with it doubts about the future of reforms in the country. "There is a broader debate within political circles about the fiscal stance in 2021 and beyond, with growing calls for the government to break the spending cap which is enshrined in the constitution and limits growth in primary spending to the rate of inflation," said analysts at Capital Economics. The dollar emerged from 27-month lows after the Fed suggested it could pursue aggressive stimulus measures for longer than under its previous strategy. Rallying copper prices saw top exporter Chile's peso hit one-week highs. Mexico's peso was flat, while Colombia's currency crept steadily higher from its lowest point in nearly three months. Gains in both were limited by a decline in oil prices. China's military said on Wednesday the latest U.S. navy sailing near Chinese-claimed Taiwan was "extremely dangerous" and stirring up such trouble was in neither country's interests. Meanwhile, the White House confirmed that no new high-level talks have been scheduled between the two nations after a scheduled meeting was postponed. With regional economies already struggling going into the COVID-19 pandemic, an unabated rise in cases in Latam, political uncertainty and U.S.-China tensions leave a bleak outlook for the region. The Argentine peso slipped as euphoria over a debt restructuring deal faded and focus turned back to the economy: concerns about falling reserves, persistent capital controls and economic recovery after the pandemic, and what that meant longer term about debt sustainability. Other stock markets in Latin American declined, in line with broader peers with MSCI's index of regional stocks down 1.6%. Main indexes in the region lost between 0.4% and 1% with Colombian stocks breaking a four-day winning streak. Latin American stock indexes and currencies at 1952 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1098.13 -0.62 MSCI LatAm 1974.52 -1.49 Brazil Bovespa 101056.85 -0.99 Mexico IPC 39074.03 -0.03 Chile IPSA 3999.12 -0.61 Argentina MerVal 47369.87 1.889 Colombia COLCAP 1163.64 -0.41 Currencies Latest Daily % change Brazil real 5.5300 -1.14 Mexico peso 22.1270 0.10 Chile peso 783.7 1.42 Colombia peso 3755.33 0.76 Peru sol 3.5618 0.11 Argentina peso (interbank) 73.4700 -0.10 Argentina peso (parallel) 131 0.76 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru; editing by Grant McCool and Marguerita Choy)
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