EMERGING MARKETS-China stimulus boosts Latam markets, real flat ahead of rate decision

* Markets hopeful on China's stimulus efforts * Brazilian stocks rise, Petrobras boosts * Chilean peso, stocks gain as copper prices bounce * Colombian peso tracks recovery in oil prices (Adds details, updates prices) By Sruthi Shankar Feb 4 (Reuters) - Most Latin American currencies and stocks extended recovery on Tuesday, as China's efforts to cushion the impact of coronavirus outbreak encouraged buying of risky, emerging market assets. Investors returned from a local holiday to drive the Mexican peso 0.6% higher, while the Chilean peso climbed to its highest level in a week against the dollar as copper prices bounced. Colombia, highly dependent on oil as an export and source of tax revenue, saw its peso gain 1% as crude prices rebounded briefly earlier in the day. Markets have been spooked by the virus outbreak in China, which has killed more than 420 people, disrupted travel and business operations globally, and prompted economists' to cut expectations for global growth. In a bid to restore market confidence, the People's Bank of China said it was injecting 1.2 trillion yuan ($174 billion) worth of liquidity into the markets via reverse repo operations on Monday and Tuesday. The news from China, one of Latin America's biggest export destinations, helped push a basket of stocks in the region up 1.3%. "Our early assessment is that the hit to global growth will be short-lived – as such we expect pressure on EM FX to subside as the year rolls on," Nafez Zouk, global macro strategist at Oxford Economics, wrote in a note. "So far, it looks like EM FX, particularly commodity-linked, is going to take the hit over the next few weeks and possibly months." Brazil's real was largely flat, with investors awaiting clues on the path of interest rates in Latin America's biggest economy. A Reuters poll of economists showed Brazil's central bank on Wednesday will reduce the key Selic rate by 25 basis points, taking it to a record low of 4.25% to support a still-sluggish recovery, having already made four deeper cuts in the second half of 2019. Sao Paulo stocks gained 0.9%, with state-run oil firm Petrobras offering one of the biggest boosts as it said a strike by workers had not yet affected production or jeopardized safety across the company's operations. Shares in Brazil's Gol rose as much as 5.5% after the budget airline said it had signed a codeshare agreement with American Airlines. Argentina's 2021 bond gained as Buenos Aires province narrowly averted falling into default, saying it would make a $277 million payment on the bond after creditors would not grant a last-minute approval to delay it. Key Latin American stock indexes and currencies at 2008 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1085.78 2.4 MSCI LatAm 2823.57 1.26 Brazil Bovespa 115622.92 0.87 Mexico IPC 45079.53 2.2 Chile IPSA 4669.25 1.96 Argentina MerVal 41038.38 -1.296 Colombia COLCAP 1646.31 1.3 Currencies Latest Daily % change Brazil real 4.2565 0.03 Mexico peso 18.6902 0.64 Chile peso 781.3 0.67 Colombia peso 3360.1 0.99 Peru sol 3.362 0.27 Argentina peso (interbank) 60.5800 -0.18 (Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru Editing by Nick Zieminski)