EMERGING MARKETS-Latam currencies capitalize on weakness in U.S. yields, dollar

 (Updates prices throughout, adds table)
    By Susan Mathew and Shreyashi Sanyal
    March 10 (Reuters) - Latin American currencies firmed on
Wednesday, with Brazil's real recovering from 10-month lows and
Colombia's peso hitting two-week highs as the dollar and U.S.
yields lost momentum after U.S. inflation data.
    U.S. consumer prices increased solidly in February, leading
to the biggest annual gain in a year, but underlying inflation
remained tepid.
    U.S. bonds rose and the dollar weakened after the data,
giving emerging market risk assets a fillip.
    Looking ahead, however, Commerzbank analysts predict a
further sell-off in bonds but say that emerging market
currencies are likely to be less vulnerable as investors are
likely to have learned from a taper tantrum in 2013 that had
hammered EM currencies. 
    "One could argue that the market has already priced in a
more optimistic economic outlook and with that an eventual (U.S.
Federal Reserve) tapering to a large extent," they said, adding
also that they do not forecast dollar strength going into next
    Brazil's real jumped 2.1% with all eyes on a
constitutional amendment to revive emergency COVID-19 aid. The
lower house of Congress early on Wednesday approved the core
text, with a second and final vote scheduled for later
    The Senate passed the amendment last week. Economy Ministry
and central bank officials, as well as investors, have warned
that any increase in spending must be matched by savings
elsewhere in the budget to show the government's long-term
commitment to reducing its record debt.
    Barclays and Citi on Tuesday said they expect Brazil's
central bank to hike interest rates by 50 basis points next week
pressured by inflation heading above target.
    Meanwhile, data on Wednesday showed services activity in
Brazil kicked off the year with a surprisingly strong rise in
    Chile's peso jumped 1.5% and was on course to log its
best session in a month as copper prices rallied.
    As oil prices rose, currencies of exporter Colombia
and Mexico gained more than 1% each, with the Andean
country's currency extending gains to a fifth day. 
    Among shares, BR Distribuidora surged 6% after
Brazil's largest gas station chain posted a fourth-quarter net
profit of 3.15 billion reais ($543 million) accounting for
almost all of its annual profit.
    Chile's main index, meanwhile hit 14-month highs
with gains being largely broad-based.
    Latin American stock indexes and currencies at 1912 GMT:
     Stock indexes                  Latest         Daily %
 MSCI Emerging Markets                  1326.76          0.68
 MSCI LatAm                             2245.70          2.43
 Brazil Bovespa                       111543.56          0.19
 Mexico IPC                            47227.93          0.26
 Chile IPSA                             4888.69          1.04
 Argentina MerVal                      46880.71         0.871
 Colombia COLCAP                        1345.81           0.3 Currencies                 Latest         Daily %
 Brazil real                             5.6709          2.13
 Mexico peso                            20.9108          1.33
 Chile peso                               724.2          1.49
 Colombia peso                             3551          1.12
 Peru sol                                3.6937          0.11
 Argentina peso (interbank)             90.7100         -0.06
 Argentina peso (parallel)                  140          2.86

 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru;
Editing by Steve Orlofsky and Grant McCool)