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EMERGING MARKETS-Chile's peso lead gains among Latam FX; Brazil's real lags on week

    * Chilean peso rises as copper surges to eight-year high 
    * Brazil economic activity fell 4.05% in 2020 - central bank
index

 (Updates prices)
    By Susan Mathew
    Feb 12 (Reuters) - Latin American currencies erased early
losses to firm on Friday against a steady dollar, with Chile's
peso leading gains as prices of its main export, copper, surged
to eight-year peaks. 
    Chile's peso rose 0.7%, taking weekly gains to more
than 2% - its best week in two months. Copper prices rebounded
as investors took advantage of a pullback to add to their
bullish positions, betting demand will keep outpacing supply.

    Mexico's peso was flat a day after the country's
central bank cut interest rates for the first time since
September, by 25 basis points to 4%.
    "There was a dovish surprise in that the decision to cut ...
was unanimous," wrote Sacha Tihanyi, deputy head of emerging
markets strategy at TD Securities. 
    "We believe that Banxico is stating that so long as
inflation expectations remain stable and there are no unexpected
near-term shocks to prices, the door remains open to further
easing."
    On the week, the peso looks to mark its second straight week
in the black, with higher oil prices contributing to the
currency's gain. Fellow crude exporter Colombia's peso
surged to three-week highs on Friday as oil prices rose, taking
weekly gains to 1.7% - the best since the beginning of the
year. 
    The Brazilian real reversed early losses and was up
marginally, but is set to record losses for the week as worries
remains of the government's finances. 
    Brazil will extend pandemic emergency cash transfers to the
poor and vulnerable, Economy Minister Paulo Guedes said on
Thursday, but added that the payments must come with
compensating cost-cutting measures to avoid damage to public
finances.
    Economic activity in Brazil fell 4.05% last year, a central
bank index showed, with the economic blow from the COVID-19
pandemic for the year as a whole softened by an eighth
consecutive month of growth in December.
    Markets were also hopeful that U.S. President Joe Biden's
planned coronavirus relief package will be passed by lawmakers
soon.    
    Elsewhere in Latin America, data showed oil output from the
Vaca Muerta region in Patagonia, which stalled during the
coronavirus pandemic, hit a record high in December as producers
revved up wells with an eye on rebounding prices and a new
export market.
    The region holds the world's fourth-largest shale oil
reserves. 
    Stocks markets in the region were mixed, with Chilean stocks
 scaling three-week highs, while Brazil's Bovespa I
index fell 0.2%.
    Key Latin American stock indexes and currencies:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets    1429.59     0.12
                                   
 MSCI LatAm               2408.60     0.08
                                   
 Brazil Bovespa         119081.41    -0.18
                                   
 Mexico IPC              44196.80     0.31
                                   
 Chile IPSA               4599.71     1.13
                                   
 Argentina MerVal        51357.62   -0.575
                                   
 Colombia COLCAP          1363.09    -0.34
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.3822     0.09
                                   
 Mexico peso              19.9375     0.03
                                   
 Chile peso                 721.9     0.32
                                   
 Colombia peso             3494.5     0.86
                                   
 Peru sol                  3.6437    -0.11
                                   
 Argentina peso           88.5300    -0.09
 (interbank)                       
                                   
 
 (Additional reporting by Shashank Nayar and Shreyashi Sanyal in
Bengaluru; Editing by Jan Harvey and Jonathan Oatis)
  
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