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EMERGING MARKETS-Chilean, Mexican FX lead Latam losses as Treasury yields rise

    * Credit conditions in Brazil improved in March- C.bank
    * Treasury yields hit 2-week high
    * Tax reform protests hurt Colombian peso
    * Disapproval over Chilean President seen growing

 (Adds detail on Brazil debt, Mexican stocks, updates prices)
    By Shashank Nayar and Ambar Warrick
    April 29 (Reuters) - Latin American currencies fell on
Thursday as a jump in U.S. Treasury yields and a stronger dollar
outweighed strength in commodity prices, while regional stocks
hovered around three-month highs.
    Mexico's peso dropped 0.7%, while Chile's peso
shed 1.7%, leading losses across Latam despite expectations of
improving demand pushing up oil and copper prices.
    Chile's peso dropped as a survey showed 74% disapproval of
Chilean President Sebastián Piñera's management in April when
his government opposed a new pension withdrawal scheme to
mitigate the impact of the coronavirus pandemic. 
    U.S Treasury yields hit two-week highs, pressuring high-risk
high-yield currencies after U.S. President Joe Biden late on
Wednesday proposed trillions of dollars in new spending, and
data showed U.S. economic growth accelerated in the first
quarter.
    Investors expect U.S. inflation to spike on the new spending
measures.
    "There doesn't seem to be a clear rational driving the
currency movements and it seems like the markets are cutting
straws a little bit," said Christian Lawrence, senior market
strategist at Rabobank.
    "The Mexican peso generally drops when benchmark U.S. yield
rises, which seems to be the case, but we don't see investor
risk appetite being much affected."
    Latam currencies had rallied to three-month highs on
Wednesday after dovish signals from the Federal Reserve made
higher yielding assets more attractive.
    Brazil's real was flat after jumping to its highest
point since mid-February in the previous session. 
    Credit conditions in Brazil improved in March, central bank
figures showed, while the Treasury also slashed its 2021 debt
forecast to 87.2% of gross domestic product from 96.7%.

    Public debt levels have surged to record highs in the
country, straining government finances as a damaging wave of
COVID-19 infections prompted more spending.
    Colombia's peso fell 0.5% as thousands of Colombians
took to the streets to protest against a controversial tax
reform proposal.
    Latam stocks were muted, with the MSCI's index of regional
stocks trading flat around three-month highs. 
    Mexico's bourse surged 0.8%, pushed up by heavyweight
cement maker Cemex after it reported a more than
15-fold jump in first-quarter profit.
    Shares of Brazilian retailer B2W rose 6.3%, while
those of its peer Lojas Americanas SA fell 5.3% after
they announced a deal under which Lojas will transfer its assets
to B2W.
    
    Key Latin American stock indexes and currencies:
    
                              Latest      Daily % change
 MSCI Emerging Markets         1365.38                 0.03
                                        
 MSCI LatAm                    2434.47                 0.02
                                        
 Brazil Bovespa              120337.21                -0.59
                                        
 Mexico IPC                   48872.18                 0.79
                                        
 Chile IPSA                    4536.57                -1.08
                                        
 Argentina MerVal             50069.92                0.052
                                        
 Colombia COLCAP               1277.09                -0.71 Currencies             Latest      Daily % change
 Brazil real                    5.3532                 0.13
                                        
 Mexico peso                   20.0395                -0.69
                                        
 Chile peso                      707.8                -1.67
                                        
 Colombia peso                 3713.23                -0.51
 Peru sol                       3.7848                -0.43
                                        
 Argentina peso                93.4900                -0.05
 (interbank)                            
                                        
 
 (Reporting by Shashank Nayar in Bengaluru
Editing by Marguerita Choy and Richard Chang)
  
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