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EMERGING MARKETS-Brazil real slide 1% to lead losses in Latam

    * Brazil tax reform unlikely to pass - Lower house dep.
speaker
    * Citi sees Brazil's real trading at 5.32 by year-end
    * Mexican, Colombian peso hit by tumbling oil prices
    * Peruvian sol outperforms as roadblock at Las Bambas mine
lifted 

    By Susan Mathew
    Aug 19 (Reuters) - Brazil's real dropped 1% to lead losses
among Latin American currencies on Thursday as the dollar
retained its strength following U.S. Federal Reserve minutes
which suggested stimulus tapering may start this year. 
    The real hit over three-month lows, and was last
trading at 5.408 to the dollar, with gathering political and
fiscal headwinds weighing on the currency. 
    The deputy speaker of Brazil's lower house of Congress,
Marcelo Ramos, said an income tax reform that introduces a 20%
tax on company dividends is unlikely to pass.   
    He also noted the apparent abandonment of fiscal austerity
policies in the country due to President Jair Bolsonaro's focus
on increasing spending to win re-election next year as his
popularity tumbles.
    "The likelihood of passing a bill with a decrease of tax
collection is increasing," said strategists at Citi. 
    They also note rising power generation costs on top of
already-existing fiscal risks related to the increase of boosted
cash-transfer social program. These could impact inflation as
growth expectations, they warn. 
    But they see the real trading at 5.32 per dollar by year-end
on rising commodity prices and a weak currency resulting in a
robust trade surplus in 2021.      
    Brazil stock slumped 0.9% to hit near five-month
lows, weakening for a seventh session in eight. Mining giant
Vale sank 4.4% as iron ore prices dived 7%. Steel
maker Usiminas dropped 3.2%
    Brazilian prosecutors asked a bankruptcy court on Wednesday
to compel miners Vale and BHP Group to fully pay off
their Samarco joint venture's 50.7 billion reais ($9.47 billion)
debt.
    Oil major Petrobras tracked an over 2% slump in
crude prices. 
    This also saw currencies of crude exporters Mexico
and Colombia drop around 0.3% and 0.6% respectively.  
    Mexico created a new debt instrument known as 'Bonde F,' a
development bond, Deputy Finance Minister Gabriel Yorio said on
Wednesday.
    Mexican stocks were set for their worst session three
weeks, while MSCI's index of Latam stocks hit
April lows as stocks were knocked by growth and U.S. stimulus
tapering worries.
    Peru's sol bucked the gloom, rising 0.3% as residents
 near the Las Bambas copper mine in the Peruvian Andes lifted
the blockade of a road used to transport the red metal after
receiving overtures from President Pedro Castillo's new
government. Peru is the world's second biggest copper producer.

    
    Key Latin American stock indexes and currencies at 1410 GMT:
   Stock indexes           Latest    Daily %
                                     change
 MSCI Emerging Markets      1233.18    -2.25
                                     
 MSCI LatAm                 2340.96    -2.72
                                     
 Brazil Bovespa           115619.85    -0.88
                                     
 Mexico IPC                51154.66     -1.6
                                     
 Chile IPSA                 4318.30    -0.54
                                     
 Argentina MerVal                 -        -
                                     
 Colombia COLCAP            1318.82    -0.54
                                     
                                            
      Currencies           Latest    Daily %
                                     change
 Brazil real                 5.4089    -0.66
                                     
 Mexico peso                20.1133    -0.35
                                     
 Chile peso                   791.7    -0.58
                                     
 Colombia peso              3869.09    -0.56
                                     
 Peru sol                    4.0924     0.25
                                     
 Argentina peso             97.2900    -0.03
 (interbank)                         
                                     
 
 (Reporting by Susan Mathew in Bengaluru;
Editing by Marguerita Choy)
  
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