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EMERGING MARKETS-Peruvian sol hits record low as socialist Castillo leads

    * Socialist Castillo inches ahead in tight presidential vote
    * Mexican midterm vote shows Lopez Obrador loses
super-majority
    * Peruvian stocks tumble 7%, set for worst day in 15 months

 (Adds comments, bullets, details; Updates prices throughout)
    By Shreyashi Sanyal and Susan Mathew
    June 7 (Reuters) - Peruvian assets were slammed on Monday as
socialist Pedro Castillo overtook right-wing rival Keiko
Fujimori in the country's presidential election vote count,
while Mexican markets cheered early results of midterm
elections.       
    Peru's sol currency fell as low as 2.8% to a record
low of 3.9370, while its stock index tumbled 7.2%,
on track for its worst session since March 2020 after Castillo
took the lead against Fujimori in the official tally on the back
of a late surge of rural votes, with over 94% of the vote
counted.
    The final result may not be known for days, but Peru's
currency and bonds have suffered since Castillo scored a
surprise first-round win back in April on promises of more state
control of the country's mining, energy and telecoms industries.
 
    "The tight race and a fragmented Congress suggest that
either candidate could face governability issues," said
strategists at Citi. 
    "Uncertainty around results should preclude a rally in asset
prices in the immediate aftermath, as we wait for a final vote
count to come."  
    Mexico's peso hit a four-week high, while the Ipc
stocks index jumped 2%, hitting 2017 highs.
    Assuaging fears, President Andres Manuel Lopez Obrador's
MORENA party lost some of its majority, the weekend vote showed,
which would have allowed him to push through more wide sweeping
changes to market friendly policies.
    Monday's gains helped the peso wipe away its losses this
year and move up 0.3%. 
    Brazil's real was flat after one of its best weeks
this year. 
    Forecasts for Brazil's growth and inflation in 2021 rose to
new highs, a survey of economists showed on Monday, with
inflation moving further above the upper limit of the central
bank's target range for the year. But despite the ninth
consecutive rise in the inflation outlook, economists' view on
interest rates was unchanged.
    Chile's peso rose 0.5% despite falling prices of its
biggest export, copper. The central bank on Monday said Chile
posted a trade surplus of $1.314 billion in May, as the value of
copper exports surged. 
    "Market pricing of Latam rate curves foretells tighter
monetary policy settings over the next year. ... The state of
inflation will also be notably different in a year's time,
thanks in large part to base effects," said Sacha Tihanyi, head
of emerging markets strategy at TD Securities. 
    "We see the benefits of these shifts substantially accruing
to BRL, and to a lesser degree, MXN. On the flip-side COP will
encounter difficulties, but CLP in particular will face very
challenging headwinds, even more so considering current
valuations."
          
    Key Latin American stock indexes and currencies at 1905 GMT:
    
           Stock indexes                   Latest    Daily %
                                                     change
 MSCI Emerging Markets                      1381.27    -0.02
 MSCI LatAm                                 2696.79     1.18
 Brazil Bovespa                           131072.97     0.73
 Mexico IPC                                51549.41     2.11
 Chile IPSA                                 4163.57    -1.47
 Argentina MerVal                          67544.80    2.047
 Colombia COLCAP                            1245.44    -1.02
                                                            
              Currencies                   Latest    Daily %
                                                     change
 Brazil real                                 5.0325     0.06
 Mexico peso                                19.8194     0.69
 Chile peso                                   715.1     0.41
 Colombia peso                              3605.25     0.00
 Peru sol                                    3.9368    -2.46
 Argentina peso (interbank)                 94.9700    -0.11
                                                     
 Argentina peso (parallel)                      154     1.95
                                                     
 
    

 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru;
Additional reporting by Aaron Saldanha; 
Editing by Jonathan Oatis and Alistair Bell)
  
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