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EMERGING MARKETS-Latin American currencies subdued, Mexico rate meeting eyed

Agamoni Ghosh

Feb 7 (Reuters) - Latin American currencies were subdued on Thursday against a strong dollar but Mexico's peso steadied ahead of the year's first monetary policy meeting and stocks in Brazil recovered from their worst intra-day fall in eight months in the previous session. The greenback rose to its highest level in two-weeks on recent robust U.S. economic data, aided by the euro's fall after the European Commission sharply cut its forecasts for growth in the euro zone. "We think that the rally in EM fixed income will take a pause and expect to see some near-term profit-taking by investors," Morgan Stanley analysts said in a note. Mexico's peso recouped early losses ahead of Banxico's first monetary policy decision of 2019. Officials are expected to leave rates at 8.25 percent and signal a more dovish tone to accommodate future rate cuts. "We believe that the tone of the statement could be less hawkish than the previous one, more than what the market anticipates," said Banorte analysts in a note. Brazil's real slipped for the fifth consecutive session a day after the central bank held interest rates at a record low and signaled that muted inflationary pressures could keep them there for some time. A number of emerging market central banks have cut rates or stayed put after the U.S. Federal Reserve signaled a pause in further monetary policy tightening, citing global growth concerns. Stocks in Sao Paulo, led by financials, recovered after falling over 3 percent on Wednesday, their worst day in more than eight months, after a spokesman said Brazilian President Jair Bolsonaro will analyze proposals to reform the country's costly pension system when his health allows it. Bolsonaro is recovering from an operation and no date has been set for him to leave the hospital. Banco Do Brasil rose 1.31 percent after falling 6.09 percent the previous day, and Itau Unibanco and Bradesco advanced 0.94 and 0.66 percent, respectively. Shares of BRF Foods, which fell short of raising 5 billion reais at the end of an asset sale program, fell almost 5 percent. Chile's IPSA index rose marginally due to Latam Airlines, while the peso slipped further from six-month highs hit earlier in the week.

Key Latin American stock indexes and currencies at 1400 GMT

Stock indexes daily %Latest changeMSCI Emerging Markets 1045.05 -0.33MSCI LatAm 2871.22 0.12Brazil Bovespa 95160.67 0.55Mexico IPC - -Chile IPSA 5432.01 0.1Argentina MerVal - -Colombia IGBC - -Currencies daily %

change Latest

Brazil real 3.7175 -0.36Mexico peso 19.0927 0.16Chile peso 653.65 0.07Colombia peso - -Peru sol - -Argentina peso (interbank) - -

(Reporting by Agamoni Ghosh)