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EMERGING MARKETS-Brazil's real firms; Rising crude prices lift Mexican peso

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

 (Updates prices)
    By Ambar Warrick and Susan Mathew
    Feb 5 (Reuters) - Brazil's real jumped more than 1% on
Friday after the economy minister said the country was ready to
increase spending to combat a second wave of COVID-19, while
strength in oil markets helped crude exporter Mexico's peso. 
    The 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.
    Brazil treads a precarious line on fiscal spending, after
measures to combat the virus helped cause 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.

     A Reuters poll showed Brazil's real will hold in last
month's trading range in the short term, with strategists
closely following discussions over new stimulus plans.

    Mexico's peso rose 1.2%, while Colombia's peso
added 0.1% against a dollar hit by a disappointing U.S. jobs
report strengthening the case for President Joe Biden's $1.9
trillion stimulus package.
    Oil prices hit a one-year high on expectations of recovering
demand and supply curbs by producer group OPEC and its allies.

    Mexico's peso was set to outperform its peers for the week
with an over 2% rise - its biggest weekly gain in three months,
having marked large gains earlier in the week on a spike in
silver prices.
    But the currency was dealt a blow after the supreme court on
Wednesday struck down the government's crucial energy sector
reform. 
    "Despite the recent positive prints... 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 said. 
    Chile's peso was among the worst performing Latam
currencies this week, set for a 0.6% loss on weakness in the
prices of copper, the country's largest export. The currency
fell half a percent on Friday.  
    Latin American stocks rose on Friday, with the MSCI's index
 adding 2%. The index was also set for its best
week since early-December, as it recovered from a series of
weekly losses.
    Sao Paulo's Bovespa led gains, up 1.3%, as Petrobras
 jumped after Brazil's President Jair
Bolsonaro said he won't interfere with pricing policy set by the
oil major, but would instead seek to reduce prices via tax
changes.
    
    Key Latin American stock indexes and currencies:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets    1396.65     0.65
                                   
 MSCI LatAm               2412.71     2.06
                                   
 Brazil Bovespa         120783.26     1.28
                                   
 Mexico IPC              44344.44      0.4
                                   
 Chile IPSA               4450.55     0.87
                                   
 Argentina MerVal        51125.16    0.873
                                   
 Colombia COLCAP          1369.31     0.71
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.3780     1.28
                                   
 Mexico peso              20.1389     1.15
                                   
 Chile peso                 736.7    -0.23
                                   
 Colombia peso            3553.75     0.08
                                   
 Peru sol                  3.6367     0.17
                                   
 Argentina peso           88.0000    -0.09
 (interbank)                       
                                   
 
 (Reporting by Ambar Warrick in Bengaluru; editing by Philippa
Fletcher and Alistair Bell)
  
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