EMERGING MARKETS-Brazilian c.bank intervenes as real slumps; Colombian peso drops on tax reform

Medha Singh and Uday Sampath Kumar

drops on tax reform@

* Real cuts losses after two central bank interventions

* Colombia announces changes in tax reform

* Latin American stocks eye worst day in three months

(Updates prices; adds details, news items) Nov 26 (Reuters) - Brazil's real slipped in volatile trading on Tuesday to a fresh record low, with the government intervening twice to stymie a slump in the currency, while a change in Colombia's tax reform raised worries of higher fiscal deficit. The Brazilian central bank said it is selling dollars in the spot currency market for the second time, announcing an auction of another minimum lot $1 million after the real slumped as much as 1.2% to 4.2770 against the dollar. While the currency hit a record low last week after foreign bidders effectively failed to show up at a "mega" oil auction this month, a fresh wave of selling on Tuesday followed comments from Economy Minister Paulo Guedes that he was not worried about the currency's weakness. "The markets understood that as a sign that further depreciation is not considered a threat by the government," said Wilson Ferrarezi, an economist at TS Lombard in Sao Paulo. "The current level near 4.30 does not seem to be justified when we look at the fundamentals." In Colombia, the peso shed 1.1% as President Ivan Duque announced changes to his unpopular tax reform proposal which would cost the government some 3.2 trillion pesos ($931 million). Duque said the proposal will be modified to return value added tax (VAT) to the poorest 20% of Colombians and lower contributions to healthcare by minimum wage pensioners.

"The VAT rebate poses a risk to Colombia's fiscal stance," Christian Lawrence, Senior Market Strategist, LatAm FX at Rabobank in New York said. "Any sort of major announcement like this is going to spark some worries, particularly when it seemed to come out of the blue." Still, Colombian unions and student groups planned a seventh day of anti-government protest on Wednesday. Mexico's peso continued to weaken after revised data on Monday showed Latin America's second largest economy was in a technical recession in the first half of the year. The government said on Tuesday it would spend 859 billion pesos ($44.3 billion) in the first phase of an ambitious infrastructure plan underwritten by the private sector, to prop up the stagnating economy. The broader sentiment was also dented by caution around the ongoing U.S.-China trade talks. The region's stocks lost about 2%, set for their steepest fall in three months. ($1 = 19.3710 Mexican pesos) ($1 = 3,433.94 Colombian pesos)

Key Latin American stock indexes and currencies at 1933 GMT:

Stock indexes daily %Latest changeMSCI Emerging Markets 1047.80 -0.54MSCI LatAm 2632.63 -2.05Brazil Bovespa 106963.12 -1.35Mexico IPC 42996.52 -1.24Chile IPSA 4563.00 -1.91Argentina MerVal 32101.30 -4.16Colombia IGBC 1588.00 -0.8Currencies daily %

change Latest

Brazil real 4.2460 -0.75Mexico peso 19.5640 -0.64Chile peso 797.8 -0.81Colombia peso 3474.85 -1.23Peru sol 3.384 0.06Argentina peso (interbank) 59.9000 -0.31

(Reporting by Medha Singh and Uday Sampath in Bengaluru; Editing by Richard Chang)