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EMERGING MARKETS-Argentina stocks hit new record high but peso plunges

SAO PAULO, Dec 26 (Reuters) - Argentine shares hit a new record high after its Congress approved key business-friendly legislation, but the peso plummeted to an all-time low due to seasonal demand for U.S. dollars. Lawmakers last week approved a reform of the country's pension system despite days of demonstrations by the bill's opponents, while the legislature's lower house approved a plan for cutting corporate income and employer social security taxes.

The measures are central to President Mauricio Macri's plan to slash the fiscal deficit and attract foreign investment. It paves the way for further market-friendly legislation that his "Let's Change" coalition hopes to pass in extraordinary congressional sessions before year-end. The benchmark MerVal index jumped much as 1.84 percent to a fresh record high of 29,465.27, and rising for a sixth straight session. But the Argentine peso slid 1.2 percent as companies purchased U.S. dollars to settle year-end obligations and pay dividends. Trading in other Latin American markets was muted, in between the Christmas and New Year's holidays. Shares in Brazilian planemaker Embraer SA rose 2.5 percent on lingering expectations of a potential tie-up with Boeing Co. Boeing on Friday sought to calm Brazilian concerns about a potential tie-up with Embraer after President Michel Temer and other officials warned they would veto any full takeover bid for the manufacturer of regional jets. While Temer said he would welcome an injection of foreign capital into Embraer, his warning was the latest reminder that the company, which also makes some military planes, was one of the more successful products of Brazilian industrial policy and remains a focus of national pride.

Key Latin American stock indexes and currencies at 1600 GMT:

Stock indexes Latest Daily YTD pct pct change

change

MSCI Emerging Markets 1,138.71 -0.21 32.34 MSCI LatAm 2,782.77 0.07 18.81 Brazil Bovespa 75,537.33 0.47 25.42 Mexico S&P/BVM IPC 48,588.74 0.41 6.45 Chile IPSA 5,508.40 -0.53 32.69 Chile IGPA 27,714.71 -0.49 33.67 Argentina MerVal 29,458.22 1.82 74.12 Colombia IGBC 11,217.79 -0.29 10.76 Venezuela IBC 1,271.27 1.04 -95.99 Currencies Latest Daily YTD pct pct change

change

Brazil real 3.3179 0.47 -2.07 Mexico peso 19.7275 -0.14 5.15 Chile peso 618.3 0.73 8.47 Colombia peso 2,960.55 -0.12 1.38 Peru sol 3.238 -0.09 5.44 Argentina peso (interbank) 18.3050 -1.17 -13.28 Argentina peso (parallel) 18.62 -1.72 -9.67

(Reporting by Bruno Federowski, editing by G Crosse)