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EMERGING MARKETS-Latam FX subdued as dollar strengthens; Chilean peso tumbles

    * Chilean peso falls for third straight day 
    * Brazilian real steadies after previous session's surge
    * Petrobras CEO denies claims of 'predatory' fuel pricing
policy

 (Updates prices throughout, adds background)
    By Shreyashi Sanyal
    Jan 13 (Reuters) - Latin American currencies were mostly
muted on Wednesday, with Chile's peso tumbling for the third
straight session as steadying U.S. Treasury yields helped
support the dollar. 
    The peso slid 2% by afternoon trading against the
dollar, recently coming under pressure from weaker prices of
copper, the country's main export, on demand worries as top
consumer China imposed new curbs due to the spread of the
coronavirus.  
    Analysts say months of anti-government protests in late 2019
and the pandemic have created fertile ground for populists in
Chile, and a divided political system may make fiscal
consolidation more difficult to achieve. 
    Chileans are also gearing up to vote for its new 155-member
constitutional body in April. 
    Most other currencies in Latin America traded in a tight
range against a rising dollar, even as near-term
prospects for the safe-haven currency remained bearish.
    Brazil's real traded 0.4% higher on Wednesday,
after recording its best day since late August 2020 in the
previous session. 
    Data showed services activity in Brazil rose for a sixth
consecutive month in November, more than twice as fast as
analysts had expected and suggesting Latin America's largest
economy went into the year-end on strong footing.
    "A normalization of key rates is likely to stabilize BRL
over the course of 2021 but in view of the continued negative
interest rates it will not allow for a rally," said Melanie
Fischinger, FX and emerging market analyst at Commerzbank.
    "Uncertain fiscal policy discipline and a slowing reform
process could put considerable pressure on the real from time to
time."
    Continued delays in Brazil rolling out a vaccine against the
coronavirus will increase the risks to the expected economic
recovery this year, ratings agency Moody's lead sovereign
analyst for Brazil said.
    Mexico's peso and Colombia's peso were flat to
marginally lower. 
    Colombia's Bogota will impose strict two-week quarantines on
six more neighborhoods starting next week, Mayor Claudia Lopez
said on Tuesday, as the city moves to control a second wave of
coronavirus.
    Among stocks in the region, Brazil's Bovespa fell
1.4%, with state-run oil giant Petroleo Brasileiro SA
falling 3.8%. 
    Roberto Castello Branco, chief executive of Petrobras, has
dismissed accusations from private fuel importers that the firm
is enforcing a price policy that does not reflect market
dynamics.
   
    Key Latin American stock indexes and currencies at 1858 GMT:
  
 Stock                           Latest     Daily % change
   indexes                                  
 MSCI Emerging Markets           1363.96    0.77
                                            
 MSCI LatAm                      2506.11    0.52
                                            
 Brazil Bovespa                  121831.12  -1.75
 Mexico IPC                      45786.00   -0.36
 Chile IPSA                      4633.80    0.73
 Argentina MerVal                50941.15   -0.509
 Colombia COLCAP                 1454.96    -0.46
                                            
 Currencies                      Latest     Daily % change
 Brazil real                     5.2990     0.36
 Mexico peso                     19.8031    -0.15
 Chile peso                      737.9      -1.79
 Colombia peso                   3474.69    0.00
                                            
 Peru sol                        3.6138     -0.11
 Argentina peso (interbank)      85.5500    -0.09
                                            
 Argentina peso (parallel)       156        1.92
                                            
 
 

 (Reporting by Shreyashi Sanyal in Bengaluru
Editing by Bernadette Baum and Alistair Bell)
  
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