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EMERGING MARKETS-Mexican, Colombian FX helped by oil prices, while real surges

    * Mexican peso set to outpace peers this week
    * Latam stocks set for best week in 2 months
    * Chile's peso lags peers this week

    By Ambar Warrick
    Feb 5 (Reuters) - Strength in oil markets helped the
currencies of exporters Colombia and Mexico on Friday, while
Brazil's real jumped 1% after the economy minister said the
country was ready to increase spending to combat a second wave
of COVID-19. 
    Mexico's peso rose 0.7%, while Colombia's peso
added 0.4% to the dollar as oil prices hit a one-year high on
expectations of recovering demand and supply curbs.
    Mexico's peso was also set to outperform its peers for the
week with a 1.7% rise, having marked large gains earlier in the
week on a spike in silver prices.
    But it was dealt a blow after the supreme court on Wednesday
struck down the government's crucial energy sector reform. 
    Criticism of the government's handling of the COVID-19
pandemic on the fiscal and political front damaged the peso
through 2020, and left its outlook uncertain in 2021.
    "Despite the recent positive prints (driven by the gradual
reopening of the economy), the outlook for real activity in
Mexico remains uninspiring due to a combination of mostly
domestic factors, including the underwhelming policy response,
particularly on the fiscal front," Goldman Sachs analysts wrote
in a note.
    Brazil's real surged after Economy Minister Paulo
Guedes said the country will open spending taps "quickly" to
tackle the second wave of the COVID-19 pandemic if Congress
demands it, but with an eye on longer-term fiscal stability.

    The government needs to be mindful of fiscal spending, after
measures to combat the virus saw the country post a record
deficit in 2020.
    A report said the government was also in talks to reduce
taxes on fuel- a move that could help cool inflation.

    Most Latam currencies lagged their emerging market peers for
the week as regional cases spiked and countries were relatively
slower in rolling out vaccines.
    Chile's peso was among the worst performing Latam
currencies this week, set for a 0.2% loss on weakness in the
prices of copper, the country's largest export. The currency
fell slightly on Friday.  
    Latin American stocks rose on Friday, with the MSCI's index
 adding 1.3% in early trade. The index was also
set for its best week since early-December, as it recovered from
a series of weekly losses.
    Key Latin American stock indexes and currencies:
    
                              Latest      Daily % change
 MSCI Emerging Markets         1394.13                 0.47
                                        
 MSCI LatAm                    2395.04                 1.31
                                        
 Brazil Bovespa              120378.08                 0.94
                                        
 Mexico IPC                          -                    -
                                        
 Chile IPSA                    4456.65                 1.01
                                        
 Argentina MerVal                    -                    -
                                        
 Colombia COLCAP               1359.63                    - Currencies             Latest      Daily % change
 Brazil real                    5.3940                 0.98
                                        
 Mexico peso                   20.2260                 0.72
                                        
 Chile peso                      735.7                -0.10
                                        
 Colombia peso                 3543.52                 0.36
 Peru sol                       3.6428                 0.00
                                        
 Argentina peso                87.9900                -0.08
 (interbank)                            
                                        
 

 (Reporting by Ambar Warrick in Bengaluru; editing by Philippa
Fletcher)
  
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