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EMERGING MARKETS-Brazil's real jumps 2%; Argentine stocks shine

    * Real rises in catch-up trade
    * Mexico's peso recovers from 2-week low
    * Petrobras Distribuidora lifts Brazil's Bovespa
    * Best day in two months for Merval as YPF surges

 (Updates prices)
    By Ambar Warrick and Susan Mathew
    Jan 26 (Reuters) - Brazil's real rose 2.2% on Tuesday in
catch-up trade after a long weekend, although sentiment in Latin
America was dampened by increased COVID-19 infections and
concerns over fiscal health in the region. 
    With Brazil's Economy Minister Paulo Guedes saying he
expects economic growth of 3.5% this year, the real
recovered from steep losses last week sparked by renewed
concerns over fiscal spending, as well as the central bank
saying it would not hike interest rates any time soon.

    Breaking a four-day losing streak, Brazil's Bovespa stock
index rose 0.2%. 
    Fuel distributor Petrobras Distribuidora SA
provided the biggest boost, up almost 12%, after Wilson Ferreira
Jr., the former chief executive of state-run power firm Centrais
Eletricas Brasileiras was set to take charge of the
firm.
    Argentina's Merval stock index posted its best day
in two months, with state energy company YPF jumping
9% on sweetening its offer to creditors. YPF's shares had taken
beating after its plans to swap some $6.2 billion in bonds
sparked a fierce backlash from investors.
    "We believe a rebound in Latam equity markets would be an
important step in turning around Latam FX performance," Ilya
Gofshteyn, senior EM macro strategist at Standard Chartered,
wrote in a note.
     "The boost to FX from inflows to Latam asset markets will
be greater than the drag from cross-currency trades using Latam
currencies."
    Concerns over the spread of the coronavirus in major
economies, uncertainty over vaccine distribution and increased
government deficits from fiscal spending have made Latin
American assets relatively less attractive than their emerging
market peers.
    A difference in yields with broader emerging markets has
also made currencies such as the real and Mexican peso a
less desirable means for carry trades.
    Mexico's peso rose 0.7% after a three-day losing
streak. The country has the fourth-highest death toll from the
pandemic in the world, which has weighed on demand for its
assets.
    As oil prices fell, crude exporter Colombia's peso
lost 0.7% to extend losses to a fourth straight session. 
    
    Key Latin American stock indexes and currencies:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets    1388.77    -1.52
                                   
 MSCI LatAm               2396.74     1.55
                                   
 Brazil Bovespa         117565.24     0.16
                                   
 Mexico IPC              44793.68    -0.74
                                   
 Chile IPSA               4476.04    -0.29
                                   
 Argentina MerVal        49200.84    3.646
                                   
 Colombia COLCAP          1395.50    -0.15
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.3497     2.26
                                   
 Mexico peso              19.9821     0.61
                                   
 Chile peso                 732.2     0.04
                                   
 Colombia peso            3598.28    -0.34
                                   
 Peru sol                  3.6437     0.00
                                   
 Argentina peso           87.0100    -0.11
 (interbank)                       
                                   
 
 (Reporting by Ambar Warrick in Bengaluru
Editing by Paul Simao and Nick Zieminski)
  
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