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EMERGING MARKETS-Oil, copper gains boost commodity-linked Latam FX

    * Peruvian sol set for best day since Nov
    * Mexican peso at over 6-week high
    * Stocks mixed in afternoon trade

 (Updates prices throughout, adds details)
    By Ambar Warrick
    April 6 (Reuters) - Commodity-linked currencies led gains
across Latin American asset markets on Tuesday as strong
economic data boosted oil and metal prices, although a
resurgence in local COVID-19 cases dampened the outlook.
    Mexico's peso touched its highest level in more than
six weeks, while Colombia's peso added 1% after oil
prices rebounded on positive economic data from China and the
United States.
    A rally in copper prices spurred strong gains in Chile's
peso and in the Peruvian sol, which was set for
its best day since November.
    Emerging market assets also benefited from a weaker dollar
and a drop in U.S. Treasury yields.
    The International Monetary Fund also forecast slightly
better-than-expected growth for Latin American economies in 2021
thanks to strong commodity exports. 
    But the IMF said the recovery looked mixed due to
uncertainty over the virus and vaccine supply. It also said that
Asian economies would be the best performers among emerging
markets.
    Most Latin American units are trading down for the year and
have underperformed their broader emerging market peers since
the start of the pandemic. Brazil's real is one of the
worst annual performers, despite the start of a rate-hiking
cycle by the central bank.
    "While tighter monetary policy should eventually lead to
more favorable yield differentials for Latam FX, it could
initially lead to an increase in Latam FX volatility as markets
question the willingness of local central banks to respond,"
said Ilya Gofshteyn, senior EM macro strategist at Standard
Chartered Bank.
    "Indeed, even a hawkish response might not be enough to
convince markets."
    Gofshteyn noted that volatility in Latam markets had been
subdued this year, and that inflation could pick up
substantially in the near term.
    Latin American governments have announced a slew of spending
measures to support their economies. But this in turn has raised
concerns over spiking government debt.
    Sluggish vaccination programs in major economies, such as
Brazil, have also cast a pall over the outlook for the region.
    Brazilian Central Bank President Roberto Campos Neto said
the second wave of COVID-19 infections will dent economic
activity until May.
    In Argentina, a new allocation of International Monetary
Fund special drawing rights (SDRs) and higher soy prices will
not reduce the country's risk of defaulting on its debt again,
ratings agency Moody's said.
    Most Latam stocks were mixed by afternoon trading. 
    
    Key Latin American stock indexes and currencies at 1829 GMT:
    
        Stock indexes                  Latest    Daily %
                                                  change
 MSCI Emerging Markets                  1348.31      0.71
 MSCI LatAm                             2351.50      0.83
 Brazil Bovespa                       117785.68      0.23
 Mexico IPC                            48029.49     -0.45
 Chile IPSA                             4860.78     -0.21
 Argentina MerVal                      49937.90     2.758
 Colombia COLCAP                        1323.29     -0.05
                                                         
            Currencies                 Latest    Daily %
                                                  change
 Brazil real                             5.5932      1.53
 Mexico peso                            20.1783      0.60
 Chile peso                                 717      0.66
 Colombia peso                          3635.25      1.03
 Peru sol                                 3.639      1.46
 Argentina peso (interbank)             92.2800     -0.01
                                                 
 Argentina peso (parallel)                  137      2.19
                                                 
 
    

 (Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru;
Editing by Susan Fenton and Jonathan Oatis)
  
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