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EMERGING MARKETS-Brazil stocks rise on deal news, Mexican peso falls

(Updates prices, context) SAO PAULO, Dec 21 (Reuters) - Brazil's blue-chip Bovespa index saw strong gains on Thursday, boosted by news of a potential M&A deal, while the Mexican peso sank to its lowest level since March on a disappointing inflation report. The Bovespa jumped 2.4 percent after planemakers Boeing Co and Brazil's Embraer SA said they were discussing a "potential combination". Embraer's shares soared more than 20 percent on the news. Brazilian equities were also boosted by comments by Finance Minister Henrique Meirelles that temporarily warded off fears of a credit downgrade. Speculation has swirled that major credit ratings agencies will downgrade Brazil's debt as legislators struggle to pass pension legislation seen as key to shoring up the country's budget deficit. However, Meirelles said he had not discussed a credit downgrade in recent meetings with S&P, Fitch and Moody's, adding that he had received no information suggesting such a move was imminent. The Bovespa was also aided by the performance of state-owned oil major Petroleo Brasileiro SA, known as Petrobras, whose shares shot up after the company unveiled an investment plan projecting $74.5 billion of capital expenditure from 2018 to 2022. Meanwhile, the Mexican peso fell 1.39 percent after data showed that inflation had accelerated more than expected on rising prices of fruits, vegetables and energy. The currency fell to its lowest level since March before paring some losses to trade at 19.48 pesos per dollar. Mexico's IPC stock exchange fared better, rising 0.22 percent, mirroring gains on Wall Street. ($1 = 3.30 reais)

Key Latin American stock indexes and currencies at 2100 GMT:

Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1134.72 0.17 31.38 MSCI LatAm 2789.30 0.67 18.37 Brazil Bovespa 75133.43 2.41 24.75 Mexico S&P/BVM IPC 48495.91 0.22 6.25 Chile IPSA 5450.83 -1.41 31.30 Chile IGPA 27454.47 -1.23 32.41 Argentina MerVal 28480.71 1.47 68.35 Colombia IGBC 11203.76 0.37 10.62 Venezuela IBC 1280.33 -0.48 -95.96 Currencies daily % YTD % change change

Latest

Brazil real 3.3068 0.05 -1.74 Mexico peso 19.4800 -1.39 6.49 Chile peso 620.5 -0.02 8.09 Colombia peso 2965.2 -0.21 1.22 Peru sol 3.267 0.00 4.50 Argentina peso (interbank) 17.9300 -0.92 -11.46 Argentina peso (parallel) 18.04 0.11 -6.76

(Reporting by Gram Slattery; additional reporting by Julia Love; Editing by James Dalgleish and Rosalba O'Brien)