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EMERGING MARKETS-Latam FX fails to gain versus weak dollar; stocks dip

Aaron Saldanha

Jan 10 (Reuters) - Latin American currencies failed to take advantage of a soft dollar on Thursday, consolidating gains made after the prior day's release of the U.S. Federal Reserve's December meeting minutes, while Latin American stocks eased as hopes of a concrete U.S.-China trade deal dimmed. The Fed minutes were perceived by markets to be dovish, and sparked strong performance in emerging markets in Latin America and beyond, whose currencies benefit from a weak greenback. "We are also in the weaker U.S. dollar camp," even though bigger moves in emerging market foreign exchange need to wait for stronger data from China, Citigroup Head of Emerging Market strategy Dirk Willer and Emerging Markets FX Strategist Kenneth Lam wrote in a note. Producer prices in China, a significant market for Latin America's resources exports, in December rose at their slowest pace since September 2016 as factories confronted a slowdown in demand, according to data released on Thursday. MSCI's index of Latin American stocks was 0.2 percent lower, slipping away from a more than 7-1/2-month peak hit on Wednesday. It had soared over 15 percent from a low a little more than two weeks ago. Brazil's real softened 0.1 percent, giving back a sliver of the around 6.4 percent it surged in the year through Wednesday, following the swearing-in of President Jair Bolsonaro and signs of a potential easing in the U.S.-China trade war. The country's Bovespa stocks index dropped half a percent, giving back a chunk of Wednesday's 1.7 percent jump. Mining power Vale SA - also a heavyweight on the MSCI index for the region - dropped 1.8 percent, retreating from an over one-month peak hit on Wednesday. A 1 percent fall in global oil prices boded ill for Brazilian energy stocks, with common shares of state-run oil firm Petroleo Brasileiro SA sliding 1.2 percent.

Chile's main stocks index was a touch higher but its peso softened 0.4 percent as prices of copper - its key export - slipped, amid fading trade optimism.

The currency had jumped over 3.6 percent from a trough plumbed a week ago, buoyed as copper prices gained on hopes of a U.S.-China trade deal. Argentina's peso weakened, as did Peru's sol.

Key Latin American stock indexes and currencies at 1412 GMT

Stock indexes daily %Latest changeMSCI Emerging Markets 997.18 0.28MSCI LatAm 2817.36 -0.23Brazil Bovespa 93170.01 -0.47Mexico IPC - -Chile IPSA 5267.93 0.06Argentina MerVal - -Colombia IGBC - -Currencies daily %

change Latest

Brazil real 3.6844 0.07Mexico peso 19.1912 0.17Chile peso 678.8 -0.29Colombia peso 3140.5 -0.21Peru sol 3.343 -0.15Argentina peso 37.4000 -0.08

(interbank)

(Reporting by Aaron Saldanha in Bengaluru; editing by Jonathan Oatis)