EMERGING MARKETS-Latam FX gains on commodity strength, stocks track Wall St lower

    * Chilean peso best regional performer
    * Brazil's real lags on dismal retail sales data
    * EM FX will appreciate against dollar this year - economist

 (Updates prices)
    By Ambar Warrick and Susan Mathew
    Feb 10 (Reuters) - Chile's peso rose on Wednesday as copper
prices hit an eight-year high, with broader Latin American and
emerging market currencies gaining as the dollar dipped on signs
that underlying U.S. inflation remained benign. 
    U.S. consumer prices rose moderately in January as the
pandemic continued to weigh on the labor market and the services
industry. The reading raised expectations that the Federal
Reserve would be in no hurry to tighten policy in the
    This in turn pushed up sentiment, inviting plays into
risk-driven assets across emerging markets. 
    The dollar dropped after the data, while U.S. yields - a
rise in which had recently pressured EM markets - also dipped.

    "Even if U.S. government bond yields do continue to rise, EM
currencies will generally appreciate against the dollar this
year, for two reasons," said Thomas Mathews, an emerging market
economist at Capital Economics. 
    "First, we doubt that interest rate differentials between
EMs and the U.S. will widen by much. Second, we suspect investor
appetite fiscal for risk is likely to remain strong, amid the
backdrop of a rapid economic recovery and supportive monetary
and policy." 
    Chile's peso rose 1.1% to a three-week high,
extending gains into a third session as copper prices surged on
expectations that large stimulus measures and accommodative
policies would elevate industrial demand for the metal.
    Oil exporter Colombia's peso rose 0.5% tracking
higher energy prices, while Mexico's peso firmed 0.4%.

    "We think that Mexico's central bank will lower its policy
rate by 25 basis points, to 4.00%, on Thursday given the renewed
weakness in the economy," said Mathews.
    "We think that... industrial production (may have) edged
down... in December. That may mark the end of the central bank's
easing cycle."
    Brazil's real lagged its peers as retail sales
slumped a far more-than-expected 6.1% in December, underlining
the drastic impact a second wave of infections had on the
    Brazil is among the worst hit countries by the pandemic, and
has been struggling to rein in infections and roll out vaccines.
The government recently confirmed it was considering more
stimulus measures to offset the pandemic's economic ructions.
    But these measures could possibly overstretch fiscal
spending in the country and push up risk premiums on Brazil's
debt and currency.
    Tracking a dip on Wall Street, Latin American stocks
 continued to lag their broader emerging market
peers, the latter of which hit a record high.     
    Key Latin American stock indexes and currencies:
  Stock indexes           Latest   Daily %
 MSCI Emerging Markets    1423.97     1.05
 MSCI LatAm               2402.85     0.16
 Brazil Bovespa         118410.03    -0.89
 Mexico IPC              44804.32    -0.48
 Chile IPSA               4507.26    -0.78
 Argentina MerVal        52164.04   -0.197
 Colombia COLCAP          1372.79    -0.54
      Currencies          Latest   Daily %
 Brazil real               5.3845    -0.07
 Mexico peso              20.0340     0.20
 Chile peso                 725.9     1.23
 Colombia peso            3557.75     0.47
 Peru sol                  3.6367     0.03
 Argentina peso           88.3600    -0.10
 (Reporting by Ambar Warrick in Bengaluru;
Editing by Bernadette Baum and Marguerita Choy)