EMERGING MARKETS-Mexico peso hits 2-wk low after president tests positive for COVID-19

    * Mexican peso falls as much as 1.3%
    * Brazil holiday keeps trading volumes low
    * Latam stocks lag EM peers

 (Updates prices)
    By Ambar Warrick and Susan Mathew
    Jan 25 (Reuters) - Latin American currencies weakened
against the dollar on Monday as a spike in regional COVID-19
cases hurt appetite for risk-driven assets, with the focus
turning to Mexico after President Andres Manuel Lopez Obrador
tested positive for the virus. 
    Mexico's peso dropped as much as 1.3%, extending
losses to a third straight session, after the news on Sunday,
which came after the country's worst weekly toll from the
    Data showed Mexico's economy grew 0.9% in November from
October, signaling some strength. Analysts forecast a sustained
recovery this year.
    "Following the record-breaking 18.0% year-on-year
contraction in 1H2020, the economy recovered a significant part
of the losses in 2H2020. The recovery is expected to continue in
2021," Goldman Sachs analysts wrote in a note.
    Along with the dollar gaining momentum, sluggish crude
markets weighed on commodity-reliant currencies, with Colombia's
peso dropping up to 2.2% to a near two-month low. 
    Concerns over fiscal spending and mismanagement of the
pandemic have sullied the outlook for Latam currencies this
year, with most units trading negative so far. 
    But strategists at JPMorgan cited scope for a moderate rally
in emerging market currencies, adding they remained overweight
on Latam via the Mexican and Colombian pesos.
    "There is some cyclical juice still left in the EM trade as
global growth improves and U.S. real yields remain low."
    Chile's peso fell about 0.6%, as prices of the
country's largest export, copper, fell. A poll last week saw
traders positioning for record-low interest rates in the country
through this year.
    Among stocks, those in Chile and Mexico
traded steady to higher, while Argentine shares hit an
over two-month low. Colombia's main index extended
losses to a third day.
    Alejo Czerwonko, UBS' chief investment officer for emerging
markets Americas, upgraded EM equities to the most preferred
investments for portfolios, saying the asset class stands to
benefit from the expected global economic recovery, higher
commodity prices, and steady depreciation of the U.S. dollar. 
    Brazilian markets were closed for a holiday.
    Key Latin American stock indexes and currencies at 1908 GMT:
  Stock indexes           Latest   Daily %
 MSCI Emerging Markets    1409.40     1.19
 MSCI LatAm               2362.79    -0.22
 Mexico IPC              45104.98     0.94
 Chile IPSA               4489.43     0.19
 Argentina MerVal        47606.90   -1.783
 Colombia COLCAP          1400.51     -1.3
      Currencies          Latest   Daily %
 Mexico peso              20.1180    -0.77
 Chile peso                 732.5    -0.61
 Colombia peso            3585.88    -1.68
 Peru sol                  3.6438    -0.27
 Argentina peso           86.9000    -0.38

 (Reporting by Ambar Warrick in Bengaluru; Editing by Andrea
Ricci and Richard Chang)