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EMERGING MARKETS-Chile peso extends rally as China data lifts copper

SAO PAULO, Aug 31 (Reuters) - The Chilean peso and the Brazilian real strengthened on Thursday as strong Chinese industrial figures lifted metal prices, but the Mexican peso slipped on lingering concerns over North American Free Trade Agreement talks. Growth in China's manufacturing sector unexpectedly accelerated in August, suggesting the world's second-largest economy is still expanding at a healthy clip. The figures fueled bets on strong demand for basic metals, lifting prices of major Latin American exports such as iron ore and copper. That provided a further boost to the Chilean peso's recent rally, which drove it near two-year highs. "The Chilean peso has been on a tear, boosted by rising copper prices," strategists at Brown Brothers Harriman wrote in a report. "We think the copper rally is overdone, but the growth outlook has improved, while political uncertainty may pick up as November elections approach." Such political uncertainty grew on Thursday after Chilean Finance Minister Rodrigo Valdes resigned, citing differences over economic policy with members of President Michelle Bachelet's center-left coalition government. Some saw Valdes' resignation, ahead of the November presidential and parliamentary elections, as a blow to the center-left and its presidential candidate, Alejandro Guillier, a senator who is most closely tied to Bachelet's coalition. The Brazilian real strengthened 0.6 percent in volatile trading as investors tried to influence a benchmark foreign exchange rate calculated at the last trading day of each month. The Mexican peso, however, extended recent losses. Negotiations between the United States, Canada and Mexico over NAFTA have been thornier than expected, fueling concerns of increased U.S. protectionism that could hurt the Mexican economy.

Key Latin American stock indexes and currencies at 1630 GMT:

Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1087.80 -0.02 26.18 MSCI LatAm 2873.67 0.24 22.48 Brazil Bovespa 70844.66 -0.06 17.63 Mexico S&P/BVM IPC 51050.07 -0.28 11.85 Chile IPSA 5139.45 -0.33 23.80 Chile IGPA 25679.93 -0.2 23.85 Argentina MerVal 23547.35 0.24 39.19 Colombia IGBC 10926.27 0.42 7.88 Venezuela IBC 235057.77 4.25 641.39 Currencies daily % YTD %

change change Latest

Brazil real 3.1409 0.59 3.45 Mexico peso 17.7830 -0.40 16.65 Chile peso 626.6 0.93 7.04 Colombia peso 2942.92 0.34 1.99 Peru sol 3.241 -0.06 5.34 Argentina peso (interbank) 17.3650 0.20 -8.58 Argentina peso (parallel) 18.19 0.38 -7.53

(Reporting by Bruno Federowski; Editing by Lisa Von Ahn)