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EMERGING MARKETS-Brazil's real at record low as coronavirus fears rattle Latam assets

By Ambar Warrick

* Real eyes worst month since August, potentially oversold * Mexican peso eyes mild monthly gains * Composite Latam stock, currency indexes at 1-mth lows (Adds details, updates prices) By Ambar Warrick Jan 31 (Reuters) - Brazil's real hit a record low on Friday, while risk assets across Latin America were sold down as investors were harried by the declaration of the China coronavirus outbreak as a global health emergency. The coronavirus epidemic, which has caused widespread disruption across China and claimed over 200 lives, was declared a global emergency on Thursday by the World Health Organization, in the wake of its spread to several other countries. The move created further uncertainty over the economic fallout in the world's second largest economy, which is also a major export destination for Latin America. Composite regional stock and currency indexes touched over one month lows. "The current weakness in Latin American markets has been driven by risk-off sentiment surrounding the coronavirus in China and neighboring countries, which has hit sentiment, pushed down commodity prices, and now may be starting to disrupt supply chains," said John Ashbourne, senior emerging markets economist at Capital Economics. Brazil's real weakened as much as 1% to 4.286, its weakest level ever against the dollar. The currency, which was set for its worst month in six, was further pressured by expectations of an interest rate cut by Brazil's central bank next week, which will push rates further into record-low territory. "The main sign that (the real) could be oversold is a strong devaluation since the coronavirus outbreak," said Wilson Ferrarezi, economist at TS Lombard in Sao Paulo, adding that predictions of the rate cut were also making Brazil's currency less attractive as a carry trade. The Brazilian stock index was on course for its first monthly decline in five, shedding about 1.6% for the day. The Mexican peso, which has recently garnered attention as a possible alternative to the real for carry trade, weakened about 0.5%. The currency was also set to log small gains for the month. Mexico maintained its economic growth forecast of 2% for 2020, after seeing its economy shrink in 2019, its first recession in a decade. Mexican stocks fell more than 1%. The Chilean peso touched its weakest level to the dollar in nearly two months, as prices of copper, the country's top export, remained near five-month lows on worries about demand from its top consumer, China. Data showed Chilean manufacturing production rose for a second straight month in December, bucking dire predictions of a slump in output following nearly two months of protests. Chile's stock index added about 0.5%. Argentine assets dropped as the country's government gave a Feb. 3 deadline for bondholders to accept its proposal to postpone a $250 million sovereign debt repayment. Key Latin American stock indexes and currencies at 1900 GMT Stock indexes Latest Daily % change MSCI Emerging Markets 1060.55 -1.14 MSCI LatAm 2750.24 -1.82 Brazil Bovespa 113680.12 -1.6 Mexico IPC 44244.09 -1.38 Chile IPSA 4574.31 0.51 Argentina MerVal 39877.69 -1.281 Colombia COLCAP 1631.49 -0.41 Currencies Latest Daily % change Brazil real 4.2838 -0.61 Mexico peso 18.8630 -0.48 Chile peso 799.1 -0.35 Colombia peso 3417 -0.23 Peru sol 3.384 -0.56 Argentina peso 60.3400 -0.15 (interbank) (Reporting by Ambar Warrick and Sagarika Jaisinghani in Bengaluru Editing by Alistair Bell)