Mercados Emergentes-Commodity Rally Ladam Aumenta FX, Ajuda Real do Brasil 6 Meses Abaixo

    * Brazil could see rating downgrade if spending cap breached
- CS
    * Mexican economic growth decelerates in August
    * Petrobras rallies on privatization hopes  

 (Adds details, updates prices)
    By Susan Mathew and Ambar Warrick
    Oct 25 (Reuters) - Latin American currencies firmed on
Monday, with Brazil's real leading gains in the region as
rallying commodity prices and expectations of more central bank
support spurred flows into regional assets. 
    Consumer confidence rising in Brazil for the first time in
two-months further bolstered Brazil's currency, which
rallied 1.4% after losing more than 3% last week on political
ructions and fiscal worries. 
    Hawkish calls during a central bank meeting on Wednesday
have risen on increasing fears of the government breaching its
spending limit and fanning inflation. One of the most aggressive
central banks worldwide, another 100-basis-point hike to 7.25%
is expected in Brazil. The rate has already been raised by 425
basis points so far this year.
    "The higher government expenditures are expected to worsen
the dynamics of the primary deficit, while higher nominal and
real interest rates are likely to increase interest payments,"
said Credit Suisse analysts Solange Srour and Lucas Vilela. 
    "As a result, stabilization of the gross debt-to-GDP ratio
in the medium term has become more difficult. ... In addition,
the country could suffer a downgrade in its sovereign debt
rating as the spending ceiling was highlighted by credit rating
agencies as an important fiscal anchor."
    Oil firm Petrobras and iron ore miner Vale
 rose 5.1% and 1.4%, respectively, and were the
biggest boosts on Sao Paulo's Bovespa index which jumped
2.6% to move away from 11-month lows. 
    Petrobras was also boosted by Brazilian President Jair
Bolsonaro reiterating that he was considering the privatization
of the state-run oil firm.
    Crude and copper prices jumped on tight supply, while iron
ore prices recovered after a sell-off.
    Oil exporter Colombia's peso rose slightly. 
    Mexico's peso lagged its peers, falling mildly as
data showed the country's economic growth decelerated in August.

    Stocks in Mexico extended losses into a sixth
session, falling 0.1%.
    The world's top copper producer Chile's currency rose
0.8%, while Chile's IPSA extended gains to a fourth
straight session. 
    Broader emerging market peers had a choppy session earlier
in the day after rising COVID-19 cases in China further stoked
fears about slowing growth in the world's second largest
economy. 
    In Argentina, the informal peso rate had weakened 2.05% to
195 per dollar on Friday as inflation soars and policy
uncertainty mounts ahead of November congressional elections.

    
    Key Latin American stock indexes and currencies: 
    
                              Latest     Daily % change
 MSCI Emerging Markets         1298.02               0.38
                                        
 MSCI LatAm                    2211.31               3.62
                                        
 Brazil Bovespa              109053.15               2.59
                                        
 Mexico IPC                   51845.39              -0.09
                                        
 Chile IPSA                    4167.46               2.03
                                        
 Argentina MerVal             89698.84              3.223
                                        
 Colombia COLCAP               1400.41               0.06 Currencies             Latest     Daily % change
 Brazil real                    5.5478               1.37
                                        
 Mexico peso                   20.1660               0.00
                                        
 Chile peso                     808.47               0.75
                                        
 Colombia peso                  3764.8               0.02
 Peru sol                       3.9682              -0.24
                                        
 Argentina peso                99.4800              -0.07
 (interbank)                            
                                        
 
 (Reporting by Susan Mathew in Bengaluru; Editing by Shailesh
Kuber and Jonathan Oatis)
  

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