EMERGING MARKETS-Latam currencies fall on pandemic worries as infections rise

    * COVID-19 cases still rising in Latam - PAHO 
    * Brazilian stocks rise on Vale boost
    * Brazil rate hike possible in Q1 - economist
    * Chile launches COVID vaccination drive

 (Updates prices)
    By Ambar Warrick and Susan Mathew
    Feb 3 (Reuters) - Latin American currencies slipped on
Wednesday, with Brazil's real giving up session gains against a
steady dollar amid worries about rising COVID-19 cases in the
    Cases and deaths related to COVID-19 continue to increase in
Latam countries, the Pan American Health Organization said on
Wednesday, while infections fall in neighboring Canada and
United States.
    Brazil's real gave up gains made on expectations of
COVID-19 relief measures, spurred by the country's newly elected
congressional leadership saying they would seek ways to extend
pandemic relief payments to impoverished citizens.
    Reports of the move, as well as President Jair Bolsonaro
getting a stronger standing in Congress, had pushed up the
currency this week. But it was still nursing steep losses from
last month, and is trading negative for the year.
    Brazil's central bank also warned that more fiscal spending
could erode the country's fiscal credibility. Signs of
increasing inflation in the country also pointed to pressure on
the bank to hike interest rates. 
    "The (central) bank could be willing to front-load rate
hikes in order to prevent the shocks spreading to other prices
in the economy," economists at TS Lombard wrote in a note.
    "The extension of the emergency aid would give the central
bank even more arguments to hike as early as March: the
additional fiscal stimulus could help offset the lower level of
monetary stimulus, while demanding a more cautious stance of the
bank amid the rising fiscal risks."
    Brazilian stocks rose, with iron ore miner Vale
 climbing 3.6% as it neared a 37 billion reais ($6.88
billion) deal to settle claims over a mining disaster in 2019
that killed some 270 people.
    Mexico's peso slipped 0.5% after rallying more than
2% over the past two days. The currency has been supported by a
spike in silver prices and increasing optimism over bumper
stimulus measures in the United States, which is a major trading
    Losses in the peso were somewhat limited by stronger oil
    Risk appetite has also improved this week, enabling large
gains across emerging market assets on the rollout of global
vaccine programs in the space, as well as expectations of more
stimulus measures. But most of them are still trading negative
for the year.
    Chile's currency and stocks both fell, even
as the country on Wednesday launched coronavirus vaccination
programmes, having set itself the target of inoculating around
five million citizens against the disease by the end of March.

    Key Latin American stock indexes and currencies:
  Stock indexes           Latest   Daily %
 MSCI Emerging Markets    1395.09     1.01
 MSCI LatAm               2385.61     0.62
 Brazil Bovespa         119629.65     1.18
 Mexico IPC              43952.41     0.24
 Chile IPSA               4401.17    -0.36
 Argentina MerVal        50054.33     0.74
 Colombia COLCAP          1369.15     0.06
      Currencies          Latest   Daily %
 Brazil real               5.3748    -0.39
 Mexico peso              20.2100    -0.47
 Chile peso                   734    -0.38
 Colombia peso            3533.83    -0.18
 Peru sol                  3.6408    -0.16
 Argentina peso           87.8000    -0.10
 (Reporting by Ambar Warrick in Bengaluru; Editing by Andrea
Ricci and Jan Harvey)