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EMERGING MARKETS-Dollar doldrums lift Latin American currencies

By Susan Mathew and Sruthi Shankar

(Updates market prices) By Susan Mathew and Sruthi Shankar Oct 17 (Reuters) - Most Latin American currencies were supported by a weak dollar on Thursday after the British government and the European Union agreed on a long-awaited Brexit deal, although Brazil's Bovespa stock index broke a six-day winning streak. The dollar fell sharply against the euro on the Brexit deal, spurring gains in most emerging market currencies even as Prime Minister Boris Johnson still faces a knife-edge vote in parliament on Saturday to get it approved. The Colombian peso and the Chilean peso gained 0.2% and 0.7%, respectively, while the Mexican peso held steady after a six-day run of gains. Mexico's President Andres Manuel Lopez Obrador vowed to increase wages and funding for the implementation of labor reforms, part of a campaign to convince U.S. Democratic lawmakers to ratify a new North American trade deal. The Colombian peso recovered from early lows following news Congress approved a 2020 government budget of 271.7 trillion pesos ($78.7 billion) on Wednesday, hours after the top court rolled back a tax reform proposal. The government now has to pass a new law. Morgan Stanley analysts had warned risk premia would increase in Colombian assets if the law was overturned. "With low approval ratings and limited time, the next few weeks should be challenging for the current administration and volatility in local assets will likely increase." "Additionally, local elections on October 27 are likely to add further noise to any potential upcoming Congressional debates around the law, suggesting further downside risks around the new approval process," Morgan Stanley said. The Brazilian real dipped 0.4%, continuing its slide from earlier this week after weak inflation data prompted bets of more interest rate cuts by the central bank. Brazilian stocks also edged lower, dragged down by shares in banks and oil firm Petrobras. Key Latin American stock indexes and currencies at 1951 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1028.69 0.45 MSCI LatAm 2704.90 -0.15 Brazil Bovespa 104969.47 -0.43 Mexico IPC 43421.82 -0.27 Chile IPSA 5172.31 0.43 Argentina MerVal 31833.20 3.492 Colombia IGBC 12872.70 0.17 Currencies Latest Daily % change Brazil real 4.1680 -0.35 Mexico peso 19.1990 0.01 Chile peso 711.25 0.71 Colombia peso 3448.5 0.23 Peru sol 3.349 0.39 Argentina peso (interbank) 58.3150 0.06 (Reporting by Susan Mathew and Sruthi Shankar in Bengaluru; Editing by Chizu Nomiyama)