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EMERGING MARKETS-Latam FX on pace to end festive week higher

Medha Singh

* Latam FX set for fourth straight weekly gain

* Mexican peso outperforms Latam peers

* Brazil unemployment falls in the quarter through Nov.

(Recasts, updates prices) Dec 27 (Reuters) - An index of Latin American currencies was on pace for its fourth straight weekly rise on Friday as hopes that United States and China would soon sign a trade deal, and increasing confidence in global economic health continued to bolster risky assets. The Mexican peso firmed 0.6% against the dollar at the end of a holiday-shortened week, outperforming its regional peers. The Brazilian real gained as data from the Brazilian Institute of Geography and Statistics (IBGE) showed Brazil's unemployment rate fell to 11.2% in the quarter ending November, levels not seen since 2016. "The decline of unemployment rate came sharper than expectations, in line with the outlook of ongoing gradual improvement in the labor market," said Dirk Willer, Citigroup's global head of emerging market strategy. MSCI's index for Latin American currencies is on track to post its strongest monthly gain since January, partly helped by the announcement of a Phase 1 trade truce between United States and China earlier in December. The deal, which has eased some concerns about slowing global growth, is widely expected to be signed in early January. For the month, the Chilean peso was the best performing currency in the region, closely followed by the Colombian peso. Both slipped about 0.3% on Friday. "My favorite market right now is Colombia," said Eric Leve, chief investment officer at Bailard Inc in San Mateo, California. The recent gains in the Colombian peso "hasn't just come from hot money from international investors, it also came from domestic investors as well as pensions, which is much more stable source.. There are prospects of a strong peso in 2020," Leve said. Stocks on the other hand declined, with the MSCI's index for Latin American equities off 0.6%. Losses in financial stocks pulled the Brazilian stock index down 0.9% after it hit an intraday record high earlier in the session. Equities in Mexico Colombia, and Argentina slipped between 0.3% to 1.3%.

Key Latin American stock indexes and currencies at 1925 GMT:

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(Reporting by Shreyashi Sanyal in Bengaluru; editing by Nick Macfie Editing by Alistair Bell)