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EMERGING MARKETS-Brazil's real lags the most as trade optimism wanes

By Sruthi Shankar

(Updates market prices) By Sruthi Shankar Oct 14 (Reuters) - Brazil's real led declines among Latin American currencies on Monday as optimism over a partial U.S.-China trade agreement faded with investors looking for more clarity on a resolution. The real fell 0.7% to the 4.1262 per dollar level, on track for its biggest percentage decline in a week, while the Chilean peso and the Peruvian sol also edged lower. Late on Friday, Washington and Beijing outlined the first stage of a trade deal and suspended this week's scheduled U.S. tariff hikes on Chinese goods, sparking a rally in risk assets including emerging market currencies and stocks. But existing tariffs remain in place and officials from both sides said much more work was needed before an accord could be agreed. Bloomberg reported on Monday that China wants more talks to hammer out the details, including scrapping the planned tariffs in December, before it signs the partial deal. Weak trade data out of China, a key destination for commodity exports from Latin America, also caused concern. "While the bar had been set very low, we consider the tentative U.S.-China mini deal as insufficient to lift market sentiment meaningfully as a lot of uncertainty persists," ING analysts wrote in a note. "...there is no tangible progress with regard to the issues of intellectual property/technology transfers and all tariff hikes remain in place." Chile's peso fell 0.25%, breaking a three-session winning streak, with added pressure coming from declining prices of its main export, copper. Bucking the trend, Mexico's peso rose 0.2% and looked set to extend gains to a fourth day despite ratings agency Moody's cutting forecasts for the country's gross domestic product (GDP) growth for 2019 and 2020. In Ecuador, President Lenin Moreno said on Monday he would repeal a decree that slashed fuel subsidies "in coming hours," confirming that he had given into a key demand of protesters who had spent nearly two weeks agitating against it. Ecuador's bonds had slumped to multi-month lows last week in the wake of violent demonstrations after Moreno cut fuel subsidies as part of a package of measures in line with a $4.2 billion International Monetary Fund loan. Latin American equities were steady, moving in line with Wall Street. In Brazil, stocks reversed early losses and were trading about 0.3% higher, helped by banking shares. A 1.4% fall in miner Vale after it reported a 17% decline in iron ore production from a year ago, capped gains on Brazil's main index. Markets in Argentina and Colombia were closed for public holidays. Key Latin American stock indexes and currencies at 1921 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1017.34 0.57 MSCI LatAm 2702.56 0 Brazil Bovespa 104173.71 0.33 Mexico IPC 43265.71 0.12 Chile IPSA 5131.69 -0.1 Argentina MerVal - - Colombia IGBC - - Currencies Latest Daily % change Brazil real 4.1262 -0.76 Mexico peso 19.2746 0.22 Chile peso 712.2 -0.25 Colombia peso - - Peru sol 3.367 -0.36 Argentina peso (interbank) - - (Reporting by Sruthi Shankar in Bengaluru; Editing by Andrea Ricci)