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EMERGING MARKETS-Brazil's real leads Latam FX gains on local stimulus hopes

    * Mexican, Peruvian currencies up on silver strength
    * Latam stocks surge
    * Chilean peso falls on copper weakness

    By Ambar Warrick
    Feb 2 (Reuters) - Brazil's real rose on Tuesday on a report
of more planned stimulus measures in the country, while Mexico's
peso extended gains to a second session as relatively higher
silver prices continued to benefit the currency.
    The real rose 1.3% in early trade, supported
by a report that the economy ministry is planning new stimulus
with limited fiscal impact.
    The measures will likely include the bringing forward of
end-of-year payments to retirees, easing access to credit and
allowing workers to make early withdrawals from pension funds,
the report said.
    A second wave of COVID-19 cases in Latin America's largest
economy had damaged economic activity towards the end of the
year, and seen the government mark a record budget deficit in
2020. 
    Data showed industrial output marked its worst annual
decline in 2020 since 2016 due to the virus, but expanded in
December as an economic recovery was sustained.
    "The industrial sector forward momentum decelerated towards
the end of Q4 from the exceptional 3Q pace, as expected, but
overall business conditions in the manufacturing sector remain
fair," Goldman Sachs analysts wrote in a note.
    "The fact that the COVID-19 viral picture is still far from
being brought under control, the reduction in fiscal stimulus,
and lingering fiscal risk premia may generate some headwinds to
(manufacturing) activity and slow the recovery forward
momentum."
    Mexico's peso rose 0.9% to the dollar, taking support
from elevated silver prices. While prices of the precious metal
fell about 5% from a retail trading-driven spike, they were
still trading well above last week's levels.
    Mexico is the world's largest producer of silver.
    Peru, the world's second-largest producer of the metal, saw
its sol rise about 0.1%.
    Broader risk appetite improved as investors awaited
negotiations in the United States over a fresh COVID stimulus
package.
    Still, most Latam stocks and currencies are trading lower
this year as a second wave of COVID-19 infections in the region
saw widespread selling of risk-driven assets.
    Chile's peso fell 0.3% as the prices of copper- the
country's top export- headed towards a six-week low on concerns
over demand.
    Latam stocks rose more than 2.5% in early
trade, bouncing further off a two-month low hit last week.
    Elsewhere, Sri Lankan stocks marked their worst day
in nearly four months as they retreated from recent record
highs. But they have widely outperformed most of their global
peers this year, trading about 18% higher. 
    Key Latin American stock indexes and currencies:
    
                              Latest     Daily % change
 MSCI Emerging Markets         1382.38               1.56
                                        
 MSCI LatAm                    2370.42               2.49
                                        
 Brazil Bovespa              119188.67               1.42
                                        
 Mexico IPC                       0.00                  0
                                        
 Chile IPSA                    4421.42               0.92
                                        
 Argentina MerVal                    -                  -
                                        
 Colombia COLCAP               1357.16                  - Currencies             Latest     Daily % change
 Brazil real                    5.3788               1.25
                                        
 Mexico peso                   20.1862               0.89
                                        
 Chile peso                      737.3              -0.33
                                        
 Colombia peso                 3536.22               0.99
 Peru sol                       3.6377               0.05
                                        
 Argentina peso                87.7000              -0.09
 (interbank)                            
                                        
 

 (Reporting by Ambar Warrick in Bengaluru
Editing by Alistair Bell)
  
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