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EMERGING MARKETS-Brazilian real touches 2-week low as trade doubts remain

By Sruthi Shankar

(Updates with market price) By Sruthi Shankar Oct 15 (Reuters) - Brazil's real touched a near two-week low against the dollar on Tuesday and most Latin American currencies weakened as doubts prevailed over a partial U.S.-China trade agreement, while the IMF lowered its economic growth outlook for Latin America. The real fell 0.9% in its third straight session of declines, leading losses among the regional currencies, while the Colombian and the Chilean pesos dropped 0.7% and 0.4%, respectively. Investors were unsettled about the recent trade negotiations between Washington and Beijing officials as China indicated that further talks were needed and a top U.S. official said additional tariffs will be imposed in December if a deal has not been reached by then. "Sentiment continues to deteriorate amid trade war concerns," strategists at Bank of America Merrill Lynch wrote in a note. "In the long run, investors are positive on Brazil. Still, catalysts look priced in, as most expect further Selic cuts and tax reform approval in 2020." A recent string of weak data out of Brazil had raised concerns about its economic recovery and added to bets that the central bank will bring down interest rates further. Adding to woes, the International Monetary Fund lowered its economic growth estimates for Latin America, citing U.S.-China trade war and other local factors. Mexico's peso traded slightly higher, on track for its fifth session of gains. Mexico's federal government is trying to counter an economic slowdown with targeted infrastructure spending, Finance Minister Arturo Herrera said, adding that a tax reform could be expected in the second half of President Andres Manuel Lopez Obrador's term. Analysts at Citigroup say the Mexican and Chilean pesos have benefited from hedge fund buying over the last few weeks. They added that a study of leveraged flows shows the Mexican currency is the most attractive Latam currency. Stocks in the region were steady. In Brazil, a 1% rise in shares of state-owned oil firm Petrobras was countered by a 5.2% loss in power firm Equatorial Energia SA after a regulator denied requests to raise tariffs in certain states. Key Latin American stock indexes and currencies at 2004 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1019.07 0.16 MSCI LatAm 2691.64 -0.5 Brazil Bovespa 104510.68 0.2 Mexico IPC 43262.23 -0.09 Chile IPSA 5157.50 0.51 Argentina MerVal 31344.75 -1.426 Colombia IGBC 12904.25 -0.34 Currencies Latest Daily % change Brazil real 4.1653 -0.94 Mexico peso 19.2520 0.08 Chile peso 715.05 -0.40 Colombia peso 3450 -0.70 Peru sol 3.366 0.03 Argentina peso (interbank) 58.2700 -0.38 (Reporting by Sruthi Shankar and Susan Mathew in Bengaluru; Editing by Cynthia Osterman)