EMERGING MARKETS-Latam FX retreat after four-week rally as COVID cases surge

    * Latam stocks set to extend rally to the 7th week
    * Mexico City suspends nonessential activities 
    * Fall in copper prices drags Chile's peso
    * Colombian c. bank keeps benchmark rate on hold
    * Strong dollar puts pressure on EM currencies 

 (New throughout, updates prices, market activity and comments)
    By Medha Singh
    Dec 18 (Reuters) - An index of Latin American currencies
paused on Friday after four straight weeks of gains as the
dollar rebounded from the lowest in more than two years, and
investors worried about surging coronavirus cases in the region.
    Leading losses in the region was the Mexican peso,
down 0.6% at 19.96 versus the dollar, as Mexico City and the
State of Mexico suspended nonessential activities due to surging
infections and deaths.
    Brazil's real weakened to 5.09 as the Latin America's
largest economy recorded over 1,000 new COVID-19 deaths for the
first time in over three months.
    Economy Minister Paulo Guedes said the government may
consider new economic measures to address the pandemic, but his
remarks did little to reassure investors. 
    The currency of the world's top copper producer, Chile
, fell after copper prices pulled back from above the
$8,000 a tonne level. The decline reflected caution among some
investors due to a tapering off of physical demand at high
    The Columbian peso hovered near 14-month high at
724.70 per dollar. Colombia's central bank board kept the
benchmark interest rate at 1.75% for the third consecutive.
    MSCI index of Latin American currencies slid
0.5% as the U.S. dollar bounced back after a week of declines.
    In contrast, MSCI's index of LatAm stocks was set to advance
for the seventh straight week on optimism that COVID-19 vaccines
will speed economic recovery next year as well as signs of
progress in U.S. stimulus talks lifted sentiment globally.
    Sao Paolo shares gained 0.2% led by a 5% jump in
shares of steelmaker Usiminas as it approved the
resumption of blast furnace 2 operations at the Ipatinga (MG)
plant, which were halted in April.
    "We expect equities in EM EMEA and Latin America to claw
back some more of the ground that they lost this year relative
to stock markets elsewhere, as some fundamental factors linked
to the spread of COVID-19 fade, and a rebound in the global
economy lifts investors' demand for "riskier" assets further,"
said Capital Economics' Oliver Allen.
    Key Latin American stock indexes and currencies:
 Stock indexes                                 daily % change
 MSCI Emerging Markets                1268.88           -0.32
 MSCI LatAm                           2479.29           -0.53
 Brazil Bovespa                     118553.08            0.13
 Mexico IPC                          44169.62           -0.35
 Chile IPSA                           4211.56            0.29
 Argentina MerVal                    53284.13           0.317
 Colombia COLCAP                      1442.70           -0.06 Currencies                                    daily % change
 Brazil real                           5.0863           -0.17
 Mexico peso                          19.9470           -0.77
 Chile peso                             725.2           -0.50
 Colombia peso                        3417.25           -0.16
 Peru sol                               3.595           -0.22
 Argentina peso (interbank)           82.8300           -0.13
 (Reporting by Medha Singh and Shashank Nayar in Bengaluru,
Editing by William Maclean)