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EMERGING MARKETS-Latam FX gains as Fed calms tapering fears; set for weekly loss

    * Peruvian sol top weekly performer; Chile's peso top loser
    * MSCI FX index snap six-week winning streak
    * Mexican, Chilean, Peruvian c.banks leave rates unchanged

 (Adds comments, updates prices throughout)
    By Shashank Nayar and Shreyashi Sanyal
    May 14 (Reuters) - Most Latin American currencies gained on
Friday as the dollar calmed and Treasury yields fell after
Federal Reserve officials eased fears about monetary tightening,
while the Peruvian sol headed for its best week in two decades.
    MSCI's index of Latin American currencies
gained 0.5% but was set to snap a six-week winning streak, while
stocks rose 1.3%, also set to drop for the week.
    Major emerging market assets came under pressure earlier in
the week after data showed U.S. inflation in April gained the
most in nearly 12 years, stirring worries about tighter monetary
policy.
    However, inflationary concerns eased after Federal Reserve
Governor Christopher Waller said on Thursday the central bank
would not raise rates until it sees inflation above target for a
long time, or excessively high inflation.
    "There will be data disappointments along the way as the
economy comes off the initial burst of fiscal support," said
Mazen Issa, senior FX strategist at TD Securities.
    "This is not a cause for major concern but as this week's
U.S. CPI report suggested, the market sometimes unnecessarily
panics even if the factors driving it are known to be
transitory," added Issa.
    The currency of Latin America's largest economy, Brazil
, was up 0.8% on a weaker dollar, but falling prices
for iron-ore, one of the country's top exports, inflicted weekly
losses of nearly 0.5% on the real. 
    The real received support this week after major big
international banks raised their forecasts for Brazilian
economic growth this year, after economic activity for March
suggested the economy expanded in the first quarter.

    Most other Latin American currencies including the Mexican
peso and Chilean peso gained, while the Peruvian
sol slipped after each of their respective central banks
left benchmark interest rates unchanged to help support
economies battered by the coronavirus pandemic. 
    The monetary policy committee of Chile's central bank voted
unanimously on Thursday to keep its benchmark interest rate
unchanged at 0.5%, while Peru's central bank maintained interest
rates at 0.25%.
    Mexico's peso gained 0.5% and was set to rise for the
second consecutive day as oil prices jumped and as the country's
central bank hinted at a tightening cycle on the horizon. The
peso recorded a third straight week of gains. 
    Colombia's peso gained 1.1%, also supported by the
surge in crude prices, and was set to record its best week since
the beginning of this year even as social protests rise against
a withdrawn government tax bill.   
    The Peruvian sol was poised to be the best performing
currency this week, while the currency of the world's top copper
producer Chile looked like the top weekly loser as copper
prices were on course for their first weekly decline since the
start of April, driven by a dip in demand from China. 
    "Both the Peruvian sol and Colombian peso saw a bit of a
rebound after falling sharply on the back of political
uncertainty in recent weeks," economists at Capital Economics
wrote in a client note. 
    The dollar index dropped 0.4% while Treasury yields
also slid.
    
    Key Latin American stock indexes and currencies:
    
          Stock indexes                  Latest    Daily %
                                                   change
 MSCI Emerging Markets                    1307.43     1.13
 MSCI LatAm                               2495.80     1.37
 Brazil Bovespa                         121689.03     0.81
 Mexico IPC                              49154.51     0.67
 Chile IPSA                               4556.16     2.53
 Argentina MerVal                        54686.84    3.916
 Colombia COLCAP                          1284.54     1.76
                                                          
             Currencies                  Latest    Daily %
                                                   change
 Brazil real                               5.2656     0.87
 Mexico peso                              19.8442     0.41
 Chile peso                                 699.8     1.09
 Colombia peso                            3682.88     0.97
 Peru sol                                  3.6768    -0.52
 Argentina peso (interbank)               94.0400    -0.02
                                                   
 Argentina peso (parallel)                    150     0.67
                                                   
 
    
    

 (Reporting by Shashank Nayar and Shreyashi Sanyal in Bengaluru
Editing by Mark Heinrich)
  
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