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EMERGING MARKETS-Fiscal woes see Brazil's real lag Latam peers

    * Brazil's real down 0.7%, other Latam FX reverse losses 
    * Brazil stocks set to break 6-day losing streak
    * Aeromexico jumps on restructuring deals 

 (Updates prices)
    By Ambar Warrick and Susan Mathew
    Jan 28 (Reuters) - Brazil's real slipped on Thursday on
fiscal woes, while other major Latin American currencies cut
losses to trade higher as the dollar sank in choppy trade.
    The real lost 0.7%, underperforming regional peers.
Data on Thursday showed a record primary budget deficit in
Brazil last year, as crisis-fighting expenditure saw total
outgoings surge by a third.
    This overshadowed data showing declining unemployment rate
as job growth jumped despite coronavirus-induced lockdowns.

    The prospect of high government debt and stretched fiscal
spending has reduced appetite for the country's assets. The
rampant spread of the virus has also disrupted economic
activity.
    "At this moment the government is under political pressure
that wants the reissue of assistance programs, for which there
are no sources of financing. This exerts psychological pressure
suggesting noncompliance with the budget ceiling," said Sidnei
Nehme, economist and executive director of NGO Corretora.
    Mexico's peso recovered from an over five-week low
hit earlier in the session as the greenback lost traction, while
fellow crude exporter Colombia's currency jumped more
than 1% despite declining oil prices.
    Concerns over the regional spread of the coronavirus and
slow vaccine rollouts, however, kept sentiment subdued. 
    The COVID-19 death toll in the Americas reached a million,
with Brazil and Mexico - economic heavyweights in Latin America-
struggling to cope with spiking infections and overloaded
hospitals.
    Mexico's central bank stressed the need to attract more
investment, and that the country would continue to face economic
uncertainty in 2021.
    Most regional stock indexes declined, with Mexican shares
 extending losses to a third straight session.
    But shares of Aeromexico rose more than 22%
after the Mexican airline negotiated new contracts with two
labor unions, bringing it closer to accessing a second tranche
of bankruptcy financing.
     Brazil's main index looked set to break a six-day
losing streak, up almost 2% with financial stocks in the lead. 
    
    Key Latin American stock indexes and currencies at 1432 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets    1352.81    -1.36
                                   
 MSCI LatAm               2355.66     0.85
                                   
 Brazil Bovespa         118080.15      1.9
                                   
 Mexico IPC              44127.35     -0.3
                                   
 Chile IPSA               4410.92    -0.16
                                   
 Argentina MerVal        49697.54   -0.546
                                   
 Colombia COLCAP          1367.68    -0.52
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.4401    -0.72
                                   
 Mexico peso              20.1885     0.45
                                   
 Chile peso                 737.8     0.20
                                   
 Colombia peso            3558.63     1.28
                                   
 Peru sol                  3.6427     0.03
                                   
 Argentina peso           87.2000    -0.09
 (interbank)                       
                                   
 
 (Additional reporting by Luana Maria Benedito in Brasilia;
editing by Barbara Lewis and Richard Chang)
  
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