* Peru's sol jumps 1.3% * Latam stocks drop tracking Wall Street * Delta variant spread spurs slowing growth fears (Updates prices) By Ambar Warrick July 16 (Reuters) - Brazil's real headed for a 3% weekly gain as improving prospects over economic growth helped ease fears of political unrest stemming from an ongoing corruption scandal, while Peru's sol rallied more than 1% on Friday to post its best session in three weeks. The real rose 0.1%, and was the best performing emerging market currency this week. The bulk of the currency's gains had come after the government sharply hiked its economic growth and inflation forecasts for 2021 on Wednesday. The government also intends to raise 100 billion reais ($19.64 billion) with a much-awaited income tax reform proposal, which will reduce corporate income tax but add taxation to corporate dividends and reduce subsidies. The real was also nursing two weeks of steep losses, spurred by a corruption scandal over COVID-19 vaccines and growing discontent with the government. "Coupled with the economic rebound, the high consumer prices inflation during H1/21 has not only helped boost fiscal revenues this year but is also contributing to much higher nominal GDP by the end of 2021," analysts at TS Lombard wrote in a note. "Positive as that is, Brazil’s structural fiscal issues are far from resolved and the reform agenda remains paramount for longer-term sustainability." Peru's sol was set for its best week in two months against a steady dollar, as the Andean country's currency extended gains to a third straight session on Friday. This helped cut some of the hefty yearly losses incurred on uncertainty around presidential elections there. An index of Latin American currencies was set for a weekly gain of around 2%, with a chunk of those gains thanks to the real. Most other Latam currencies were muted this week, as turbulent commodity markets offset positive cues on U.S. monetary policy from Federal Reserve Chair Jerome Powell. Rising cases of COVID-19 also weighed. Mexico's peso rose 0.4%, and was set to end the week largely unchanged, tracking weakness in oil prices. But strong economic readings put oil exporting peer Colombia's peso on track for a 0.3% weekly gain. Latam stocks, dropped, tracking losses on Wall Street as fears that the rising number of coronavirus cases and its highly infectious delta variant would hamper economic activity again. However, regional equities benefited from expectations of dovish U.S. policy, and were set for a 2.6% weekly gain. Chilean markets were closed for a holiday. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1339.66 -0.65 MSCI LatAm 2575.95 -0.58 Brazil Bovespa 126578.49 -0.7 Mexico IPC 50123.76 -0.3 Argentina MerVal 63053.89 -0.678 Colombia COLCAP 1272.31 -0.07 Currencies Latest Daily % change Brazil real 5.1102 0.12 Mexico peso 19.8530 0.41 Colombia peso 3813.6 -0.04 Peru sol 3.903 0.87 Argentina peso 96.2100 -0.02 (interbank) (Reporting by Ambar Warrick and Susan Mathew in Bengaluru; Editing by Steve Orlofsky and Marguerita Choy)
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