EMERGING MARKETS-Brazil's real leads gains as Latam bucks EM gloom

    * BRL up on economic prospects
    * Bolsonaro faces protests as COVID deaths cross 500,000
    * Latam FX, stocks outpace EM peers
    * BlackRock pro-risk; Morgan Stanley turns bearish on EMFX

 (Adds details, updates prices)
    By Susan Mathew and Ambar Warrick
    June 21 (Reuters) - Brazil's real surged on Monday, trading
just below one-year highs on a robust economic outlook, while
Mexico's peso broke a six-session losing streak as the dollar
lost momentum after a strong rally last week. 
    The real rose 1% after a survey of economists
forecast Brazilian growth, inflation and interest rates in 2021
to new highs following the central bank's indication that it
could quicken the pace of tightening. 
    Growth is now expected be to 5%, inflation 5.9%, and the
benchmark Selic interest rate at 6.5%.
    Investors seemed to look past anti-government protests over
the weekend as COVID-19 deaths in Brazil topped 500,000. 
    This comes with Bolsonaro's popularity at new lows ahead of
elections next year. A poll last month showed a left-wing rival,
former President Luiz Inacio Lula da Silva, would win in a
runoff vote if the 2022 elections were held today.
    "We believe a higher discontentment, especially if reflected
in the polls, tends to push the government to an easier fiscal
posture," Citi strategists said in a note. 
    Emerging market currencies had taken a hit last week as the
dollar rallied after the U.S. Federal Reserve struck a
surprisingly hawkish tone.    
    Morgan Stanley in a Monday note said it had turned bearish
on emerging market currencies, citing higher real rate in the
United States, expensive valuations and risks for growth
differentials to widen between developed and developing markets.
    Most emerging market currencies in Asia, Europe, the Middle
East and Africa had fallen on Monday, but Latin America got a
lift as the dollar consolidated gains.
    The MSCI's index of Latam currencies rose
0.9%, outpacing the emerging market index, which
fell 0.2%. 
    Mexico's peso looked to end its longest losing streak
since February, up 0.9%, while Colombia's peso rebounded
from six-week lows as oil prices stabilized from recent losses.

    Meanwhile, BlackRock maintained a pro-risk stance, citing a
"powerful restart" after the pandemic, while adding that they do
not see the Fed's new outlook translating into significantly
higher interest rates any time soon. 
     "Any temporary spikes in rates could challenge emerging
market assets in particular, but we advocate staying invested
and looking through any turbulence," BlackRock said in a note.
    Among stocks, Brazil's Bovespa index shrugged off
early losses and rose 0.6%, with major industrials rising on
better economic prospects. 
    Latam Stocks also outpaced their emerging market peers.
    Key Latin American stock indexes and currencies:
                              Latest       Daily % change
 MSCI Emerging Markets         1351.21                 -0.74
 MSCI LatAm                    2627.55                  0.83
 Brazil Bovespa              129212.44                  0.63
 Mexico IPC                   50349.79                  0.06
 Chile IPSA                    4294.39                 -0.83
 Argentina MerVal             65136.00                -1.963
 Colombia COLCAP               1249.71                  -0.6 Currencies             Latest       Daily % change
 Brazil real                    5.0185                  1.04
 Mexico peso                   20.4891                  0.82
 Chile peso                        747                  0.14
 Colombia peso                 3757.05                  0.24
 Peru sol                       3.9517                 -0.05
 Argentina peso                95.3700                  0.00
 (Reporting by Susan Mathew and Ambar Warrick in Bengaluru;
editing by Jonathan Oatis and Angus MacSwan)