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EMERGING MARKETS-Brazil's real, Chile's peso down over 1%, U.S. jobs data in focus

    * Real among best EMFX performers in 2021
    * Strong oil prices offer little support to MXN, COP
    * Latam stocks also fall 

 (New throughout, updates prices, market activity and comments)
    By Susan Mathew and Ambar Warrick
    July 1 (Reuters) - Latin American currencies weakened
against the dollar on Thursday, with Brazil's real and Chile's
peso sinking more than 1% each as investors stepped back ahead
of key payrolls data from the United States this week. 
    The real and Chile's peso both relinquished
early gains made on positive data, as investors worried about
rising infections of the "delta" variant of the coronavirus.
    Manufacturing activity in Brazil hit four-month highs in
June, PMIs showed, while Chile's economic activity jumped a
better-than-expected 18.1% in May. 
    This follows disappointing activity numbers from Asia and 
Russia which dulled sentiment already hurt by worries over the
virus. 
    Mexico's peso fell 0.3%, while Colombia's peso
shed 0.8%, taking little support from a rally in oil prices. The
MSCI's index of Latin American stocks fell more
than 1%. 
    "We're more optimistic than most about the near-term
economic outlook for Latin America, even though the region's
prospects are still dimmer than elsewhere in the emerging
world," said William Jackson, an emerging market economist at
Capital Economics, citing strong activity numbers.  
    Brazil's real is among the best performing emerging market
currencies so far this year, with a 3% gain. But concerns over
local politics have cast doubts over whether the gains will
hold.
     
    The dollar fell ahead of U.S. nonfarm payrolls data on
Friday, which will be watched to see whether it would prompt the
Federal Reserve to start tightening policy sooner than forecast.

    But despite the Fed's hawkish tilt in its policy-setting
committee's last meeting, foreign net flows to emerging market
equity and debt portfolios accelerated in June to nearly three
times the May figure, data from the Institute of International
Finance showed on Thursday.
    Still, the end of the coronavirus pandemic in Latam "remains
a distant future," the Pan American Health Organization said on
Wednesday, with only one in 10 people fully vaccinated so far.

    While cases have been falling in Mexico, COVID-19-related
deaths likely exceed the confirmed toll by about 60%, the
country's Health Ministry data released on Wednesday showed.

    In Brazil, calls for the impeachment of President Jair
Bolsonaro rose as findings of a probe into the government's
handling of the pandemic led to the suspension of a $324 million
COVID-19 vaccine procurement deal. 
    Elsewhere, Belarus's rouble snapped a three-day
losing streak against the dollar. Ratings agency S&P kept
Belarus's rating unchanged after a review on Wednesday, saying
European Union sanctions over Minsk's forced landing of a
passenger plane weren't significant enough to change the picture
of the country's finances.
    
    Key Latin American stock indexes and currencies:
    
                              Latest      Daily % change
 MSCI Emerging Markets         1366.67               -0.58
                                        
 MSCI LatAm                    2587.85               -1.25
                                        
 Brazil Bovespa              125140.06               -1.31
                                        
 Mexico IPC                   50495.67                0.41
                                        
 Chile IPSA                    4345.80                0.33
                                        
 Argentina MerVal             62052.61              -0.512
                                        
 Colombia COLCAP               1255.51                0.53 Currencies             Latest      Daily % change
 Brazil real                    5.0336               -1.15
                                        
 Mexico peso                   20.0022               -0.36
                                        
 Chile peso                     740.87               -1.24
                                        
 Colombia peso                  3776.5               -0.78
 Peru sol                       3.8675               -0.72
                                        
 Argentina peso                95.7600               -0.03
 (interbank)                            
                                        
 
    
 (Reporting by Susan Mathew in Bengaluru; editing by Jonathan
Oatis and David Gregorio)
  
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