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EMERGING MARKETS-Latam FX boosted by dovish Fed, stocks muted

    * Petrobras tumbles on fears of government interference
    * Copper-exposed currencies strengthen

    By Ambar Warrick
    April 8 (Reuters) - Latin American currencies rose on
Thursday as dovish signals from the Federal Reserve weakened the
dollar and U.S. treasury yields, inviting more buying into
risk-driven assets.
    Brazil's real rose 1%, even as coronavirus infections
and deaths soared in the country. The country is set to overtake
the United States as the worst stricken by the pandemic, with a
sluggish vaccine rollout adding to investor concerns.
    That, along with stretched fiscal spending and political
woes, made the real one of the worst performing emerging market
currencies in 2020 and again in 2021.
    "Coupled with the risk that the lockdown measures might have
to be extended for longer, which would hamper the recovery in
Q2/21, the ongoing uncertainty over the 2021 budget and the
fiscal outlook will be yet another headwind for the recovery in
investor sentiment in the coming weeks," analysts at TS Lombard
wrote in a note.
    Broader emerging market stocks and currencies rose on
weakness in the dollar and U.S. treasury yields, after the
minutes from the Fed's latest meeting showed that the bank was
in no hurry to tighten monetary policy.
    Pressure from high yields has weighed down emerging market
assets this year, especially in the currency and fixed income 
space as yield differences narrowed between risky and more
stable debt.
    Chile's peso and the Peruvian sol both gained
on strength in copper prices amid concerns over supply, while
optimism over rising demand in major economies also supported
prices.
    Mexico's peso and Colombia's peso rose on
recent gains in oil prices, as expectations of increased demand
supported the crude market.
    Mexican inflation rose above the central bank target in
March, coming in in line with expectations. The Mexican central
bank held its benchmark rate last month, supporting the peso,
and had forecast slightly higher inflation in the coming months.
    Latam stocks were flat in early trade. 
    Brazilian oil refiner Petroleo Brasileiro SA was
one of the worst performers on the benchmark index after
 comments from President Jair Bolsonaro that recent hikes in
natural gas prices were "unacceptable" and that it was still
possible to change its pricing policy.
    Concerns over Bolsonaro's interference in the company
spurred a large selloff in Brazilian assets earlier this year on
fears of more government interference in the private sector. 
    
    Key Latin American stock indexes and currencies:
    
                              Latest      Daily % change
 MSCI Emerging Markets         1342.68                0.29
                                        
 MSCI LatAm                    2358.74                0.03
                                        
 Brazil Bovespa              117838.12                0.18
                                        
 Mexico IPC                   47987.88                0.19
                                        
 Chile IPSA                    4870.60                0.24
                                        
 Argentina MerVal                    -                   -
                                        
 Colombia COLCAP               1331.49               -0.33 Currencies             Latest      Daily % change
 Brazil real                    5.5863                1.04
                                        
 Mexico peso                   20.1165                0.44
                                        
 Chile peso                      708.3                0.71
                                        
 Colombia peso                  3633.1                0.55
 Peru sol                        3.608                0.00
                                        
 Argentina peso                92.3800               -0.04
 (interbank)                            
                                        
 

 (Reporting by Ambar Warrick in Bengaluru; Editing by Alison
Williams)
  
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