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EMERGING MARKETS-Brazil stocks at record high, but Latam FX subdued by virus woes

    * MSCI Latam stocks index at 10-month high
    * Chilean stocks outperform peers this week
    * MSCI EM stocks index hits record high

 (Updates prices throughout, adds comments)
    By Ambar Warrick and Shreyashi Sanyal
    Jan 8 (Reuters) - Brazilian stocks hit a record high on
Friday on expectations of increased stimulus and accommodative
monetary policy, while Latin American currencies eyed weekly
losses in the wake of record-high coronavirus infection rates.
    The Bovespa index rose 1.8% to a record high, while 
MSCI's index of Latam stocks rose 0.4% to a
10-month high, and was set to add 2.5% this week.
    MSCI's index of emerging market stocks rose 2% to
hit a record high for the first time since November 2007 as the
combination of post COVID-19 economic recovery hopes, mass
global stimulus and a weak dollar boosted investor confidence.

    Chilean stocks were the best weekly performers in
the region as markets bet on a solid economic recovery in the
country this year.
    The Democrats' taking of the U.S. Senate this week pointed
to increased liquidity measures in the world's largest economy,
boosting the outlook for global equities.
    "Fresh stimulus hopes lifted global stocks over the last 24
hours ... A unified (U.S.) government as the result of the "blue
sweep" victory will smooth the path to more fiscal stimulus.
This points to the reflation trade remaining intact," Mark
Haefele, chief investment officer at UBS Global Wealth
Management wrote in a note.
    But in local foreign exchange markets, this optimism was cut
short as coronavirus infections in major Latin American
economies rose at record rates.
    This saw many regional currencies mark steep losses on
Friday, erasing all gains made earlier in the week. Brazil's
real and Mexico's peso both fell more than
0.5% each, while Chile's peso marked its worst day in
nearly seven months.
    "We may be in a consolidation phase for now with respect to
EM FX, but do think that the USD weakness trade has more to
give," Citi analysts wrote in a note.
    Brazil's real rose 1.2% on Friday, tracking a rise in prices
of iron ore, one of the country's top exports. But it was set
for its worst week since late-September.
    "Rising new virus cases and fiscal tightening mean that the
early months of this year will be much more difficult for the
economy," said William Jackson, chief emerging markets economist
at Capital Economics. 
    MSCI's index of regional currencies was set
to lose 0.8% this week.
    The U.S. dollar also saw increased buying after data showed
the economy shed jobs for the first time in eight months.

    
    Key Latin American stock indexes and currencies:
    
       Stock indexes                 Latest      Daily %
                                                  change
 MSCI Emerging Markets                 1348.96        2.02
                                                
 MSCI LatAm                            2511.94         0.4
 Brazil Bovespa                      124565.73        1.78
 Mexico IPC                           46686.95        1.08
 Chile IPSA                            4513.46       -0.34
                                                
 Argentina MerVal                     51983.17      -0.985
 Colombia COLCAP                       1440.27        0.32 Currencies                 Latest      Daily %
                                                  change
 Brazil real                            5.4229       -0.45
                                                
 Mexico peso                           20.0772       -0.39
                                                
 Chile peso                              708.9        0.49
 Colombia peso                          3466.4        0.59
 Peru sol                               3.6057        0.39
                                                
 Argentina peso (interbank)            85.1200       -0.13
                                                
 Argentina peso (parallel)                 157        3.18
                                                
 
     

 (Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru
Editing by Nick Zieminski, Kirsten Donovan)
  
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