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EMERGING MARKETS-Brazil's real surges on iron ore prospects, catchup trade

    * Peruvian sol extends losses to a fifth straight session
    * Mexican inflation more than expected, peso flat

    By Ambar Warrick
    April 22 (Reuters) - Brazil's real raced ahead in catch-up
trade on Thursday, with a spike in Chinese steel prices also
providing support, while Chile's peso came off three-month
highs, tracking an initial dip in copper prices.
    The real jumped 1.5% after a holiday on Wednesday.
Most other Latin American currencies had firmed then, owing to a
weaker dollar in the light of falling U.S. treasury yields.

    The currency was supported by Chinese steel prices jumping
to record highs, which pointed to robust demand for iron ore- a
major component of steel making, and a top export from Brazil to
China.
    Still, a damaging new wave of COVID-19 infections has held
back gains in emerging market currencies, with most Latam units
following suit. Regional currencies traded lower for the day. 
    Brazil, in particular, has been dealing with record-high
infections and deaths, which have spurred lockdowns across
several states to contain the virus.
    Industrial confidence fell in April for a fourth month,
pointing to continued pressure on the economy from the pandemic.

    "Rising inflation, cost/input push pressures, supply chain
disruptions, renewed lockdowns given the deterioration of the
COVID picture and the unsettled policy/political backdrop are
sapping both consumer and business confidence," Goldman Sachs
analysts wrote in a note.
    Chile's peso fell about 0.8%, coming off three month
peaks as the prices of copper- the country's top export- stalled
just below 10-year highs.
    Peru's sol plummeted 1.1% to near record-low levels,
extending losses into a fifth straight session after a survey
put socialist Pedro Castillo in pole position to win the
presidency in a second round ballot set for June.
    Mexico's peso was flat, as inflation rose
faster-than-expected in the first half of April to its highest
level in more than three years and far surpassing the central
bank's target range.
    Still, the peso is likely to be supported by steady interest
rates, which the central bank is expected to keep at 4% for
longer than expected. 
    Latam stocks rose in early trade, supported
by Brazil's Bovespa index adding 0.5%.
    
    Key Latin American stock indexes and currencies:
    
                              Latest    Daily % change
 MSCI Emerging Markets         1340.56             0.28
                                        
 MSCI LatAm                    2406.77             0.44
                                        
 Brazil Bovespa              120663.20              0.5
                                        
 Mexico IPC                   48804.60            -0.13
                                        
 Chile IPSA                    4935.10             0.07
                                        
 Argentina MerVal                    -                -
                                        
 Colombia COLCAP               1305.05            -0.01 Currencies             Latest    Daily % change
 Brazil real                    5.4965             0.93
                                        
 Mexico peso                   19.8860            -0.07
                                        
 Chile peso                      703.7            -0.82
                                        
 Colombia peso                  3620.1            -0.21
 Peru sol                       3.7497            -1.09
                                        
 Argentina peso                93.0700            -0.03
 (interbank)                            
                                        
 

 (Reporting by Ambar Warrick in Bengaluru
Editing by Bernadette Baum)
  
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