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EMERGING MARKETS-Mexican peso up after c.bank decision, Latam FX steady

    * Mexican c.bank keeps rate flat as inflation expectations
rise 
    * Investors pricing in tightening cycle by year end -
analyst
    * Brazil economic activity slows less than expected in March
    * Chilean, Peruvian central bank statements eyed 

 (Adds comments, updates prices throughout)
    By Shreyashi Sanyal and Shashank Nayar
    May 13 (Reuters) - Mexico's peso rose on Thursday after the
country's central bank held its key interest rate steady, while
most other currencies in Latin America rebounded from steep
losses in the prior session. 
    The peso rose 1.2% as the Mexican central bank,
locally known as Banxico kept the rate unchanged at 4.0%, as
expected, after cutting by 25 basis points in February, but its
five-member board reflected growing concerns about the path of
inflation.
    "Having closed the door to further easing at the last
meeting, today's decision was never really in doubt," said
William Jackson, chief emerging markets economist at Capital
Economics.  
    "Investors, in contrast, are pricing in the start of a
tightening cycle by the end of the year."
    Analysts at TD Securities say the communication from Banxico
follows on from the March meeting's incremental "hawkishness".
    Brazil's real edged higher, as economic
activity in March recorded a smaller decline than economists had
expected, implying that first quarter economic growth rose 2.3%
despite a second wave of COVID-19 infections.
    Following the upbeat data, economists at Barclays, Goldman
Sachs and Credit Suisse were among those who raised their gross
domestic product growth forecasts for 2021 to at least 4% for
Brazil. 
    Citi also increased its holding of Brazil U.S. dollar
sovereign bonds to an overweight position, citing a window of
opportunity before elections in October 2022.
    The real and most other Latam currencies fell on Wednesday
after a jump in U.S. inflation raised concerns the Federal
Reserve would bring forward its timeline for tightening policy.
    But a sluggish labor market recovery has seen the Fed exude
largely dovish signals, even as data showed fewer Americans
filed new claims for unemployment benefits last week, beating
economist forecasts. 
    The Chilean peso held steady, while the Peruvian sol
 gained 1.7% ahead of their respective central bank
meetings later in the day.
    The Argentine peso was flat as inflation likely eased
slightly to around 3.8% in April, a Reuters poll of analysts
showed, coming off a peak the month earlier that was its highest
since 2019, as the South American country battles to rein in
rising prices..
    Colombia's peso gained 0.8%, after marking its worst
day in more than a week as rising social unrest due to
anti-government protests sullied the country's economic outlook.
    
    Key Latin American stock indexes and currencies at 2015 GMT:
    
           Stock indexes                   Latest    Daily %
                                                     change
 MSCI Emerging Markets                      1292.63    -1.72
 MSCI LatAm                                 2458.45    -0.38
 Brazil Bovespa                           120836.80     0.94
 Mexico IPC                                48809.63     0.13
 Chile IPSA                                 4443.72    -0.94
 Argentina MerVal                          52603.77    3.104
 Colombia COLCAP                            1262.29    -1.79
                                                            
              Currencies                   Latest    Daily %
                                                     change
 Brazil real                                 5.3061     0.10
 Mexico peso                                19.9260     1.15
 Chile peso                                   707.1     0.10
 Colombia peso                              3718.48     0.79
 Peru sol                                    3.6577     1.59
 Argentina peso (interbank)                 94.0100    -0.02
                                                     
 Argentina peso (parallel)                      148     2.70
                                                     
 
     

 (Reporting by Shreyashi Sanyal and Shashank Nayar in Bengaluru;
editing by Barbara Lewis and Diane Craft)
  
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