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EMERGING MARKETS-Brazil real hits 3-month low as dollar firms after Fed minutes

    * 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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