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EMERGING MARKETS-Latam FX falls against stronger dollar; sol stabilizes after tumble

    * Brazil producer price inflation rises
    * Peru's sol sole gainer

    By Ambar Warrick
    May 4 (Reuters) - Colombia's peso hovered around six-month
lows on Tuesday as most Latin American currencies dipped against
a stronger dollar, while the Peruvian sol appeared to have
stabilized after steep losses in the prior session.
    The dollar rose as investors awaited key U.S. readings this
week, which are likely to show an economic recovery gathering
steam. 
    A wave of COVID-19 infections in Latin America has also kept
appetite for local currencies subdued, while concerns over
political issues in Colombia and Peru weighed on sentiment.
    The Colombian peso, which fell 0.5%, led losses for a
second straight day after the government withdrew a proposed tax
reform, which was followed by the resignation of finance
minister Alberto Carrasquilla.
    The government had insisted that the reform was vital to
stabilizing Colombian finances as the country grapples with the
economic ructions of the COVID-19 pandemic. Analysts also said 
that not passing the reforms could hurt Colombian economic
growth and investment viability. 
    "Overall, we expect Congress to eventually approved a
watered down tax reform bill and with a mix of taxes that is
less growth/investment friendly than the original proposal of
Minister Carrasquilla," analysts at Goldman Sachs wrote in a
note.
    Losses in Brazil's real were somewhat
constrained, as investors priced in a large interest hike by the
Brazilian central bank on Wednesday, amid rising inflation.
    Producer prices in March rose at their fastest annual rate
since comparable records began seven years ago.
    Chile's peso fell 0.3%, while Mexico's peso
dipped 0.2%. But both currencies are expected to mark strong
gains this year, with Chile benefiting from a spike in copper
prices, while Mexico is set to benefit from  a bounceback in the
U.S. economy.
    Peru's sol was the sole gainer for the day, trading
marginally higher after tumbling more than 1% on Monday.
Concerns over a socialist presidency had pushed the sol to
record lows last month, as left-leaning presidential candidate
Pedro Castillo was seen leading the polls ahead of a run-off
vote in June. 
    Latam stocks fell in early trade, tracking
losses across broader emerging market stocks. 

    Key Latin American stock indexes and currencies:
    
                              Latest     Daily % change
 MSCI Emerging Markets         1335.66              -0.24
                                        
 MSCI LatAm                    2370.15              -0.96
                                        
 Brazil Bovespa              118572.77              -0.53
                                        
 Mexico IPC                   48496.69                  -
                                        
 Chile IPSA                    4631.05               0.91
                                        
 Argentina MerVal                    -                  -
                                        
 Colombia COLCAP               1219.66               0.25 Currencies             Latest     Daily % change
 Brazil real                    5.4370              -0.37
                                        
 Mexico peso                   20.2100              -0.24
                                        
 Chile peso                      706.2              -0.30
                                        
 Colombia peso                 3821.56              -0.51
 Peru sol                       3.8068               0.24
                                        
 Argentina peso                93.7100              -0.03
 (interbank)                            
                                        
 
    

 (Reporting by Ambar Warrick in Bengaluru; Editing by Angus
MacSwan)
  
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