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EMERGING MARKETS-Dollar strength pressures Latam FX, Brazil real falls from over 3-mth peak

By Susan Mathew

By Susan Mathew July 5 (Reuters) - Latin American currencies weakened on Friday, with Brazil's real retreating from three-month highs, as the dollar strengthened after a strong rebound in U.S. job growth had investors trimming bets for an aggressive interest rate cut by the Federal Reserve in its July meeting. The dollar index, which measures the greenback against a basket of six major currencies, was up 0.5% after data showed that U.S. job growth rebounded strongly in June as government hiring surged. "The results were really encouraging and reinforced the underlying strength of the U.S. market and the U.S. economy in general, and is likely to help to temper the markets' aggressive calls for easier policy from the Federal Reserve," said Candice Bangsund, asset allocation manager at Fiera Capital in Montreal. The Brazilian real fell 0.7% after touching its strongest level in more than three months on Thursday after the government's pension reform bill cleared a key congressional hurdle. A Reuters poll showed that the real is waiting for an imminent breakthrough of President Jair Bolsonaro's social security overhaul in Congress to consolidate recent gains after a volatile first half of 2019. Senators are expected to complete the legislative process by year-end. The Mexican peso slipped 0.1%, while the Chilean peso slid half a percent as the dollar's strength pressured copper prices. Emerging market assets have rallied in the first half of 2019 on growing hopes that major central banks would turn to dovish policies in the wake of slowing global growth, which would make emerging market assets more attractive. Another Reuters poll showed that developing world currencies may have seen the best of 2019 as U.S. President Donald Trump is expected to backpedal on his conciliatory tone from the recent G20 summit. MSCI's index of Latin American currencies is up 0.4% so far this week, while its stocks index is on course to wrap up with a 1.3% gain for the week. Among stocks, Brazil's Bovespa stock index fell 0.7% after scaling an all-time high last session on pension reform optimism. Losses were broad-based. A dip in iron ore prices hitt miner Vale, which weighed most on the index. Key Latin American stock indexes and currencies at 1336 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1057.64 -0.66 MSCI LatAm 2881.39 -1.34 Brazil Bovespa 102779.67 -0.83 Mexico IPC - - Chile IPSA 5048.46 -0.13 Argentina MerVal - - Colombia IGBC - - Currencies Latest Daily % change Brazil real 3.8243 -0.68 Mexico peso 19.0340 -0.19 Chile peso 682.48 -0.51 Colombia peso 3212.63 -0.73 Peru sol 3.291 0.00 Argentina peso - - (interbank) (Reporting by Susan Mathew in Bengaluru; editing by Jonathan Oatis)