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EMERGING MARKETS-Latam assets extend gains as slowing coronavirus cases brew optimism

By Ambar Warrick

By Ambar Warrick April 7 (Reuters) - Latin American assets extended their recovery into a second session on Tuesday, as risk assets were propped up by hopes that the coronavirus outbreak had peaked in several hotspots. Data showing that new infections were slowing across several U.S. states, coupled with a lower rate of deaths in several European countries, led many to believe that the virus would plateau. Regional stocks shot up in tandem with gains in developed world equity markets, with Brazil's Bovespa surging around 7%. State-run oil and gas behemoth Petroleo Brasileiro , one of the largest stocks on the Bovespa, added nearly 7% after it approved lower oil production in April than from the same month a year ago. Chilean stocks gained about 1.8%, while Colombian stocks added 3%. Still, the gains were a fraction of what was lost over a month-long rout due to the outbreak. Economic damage from the outbreak is yet to be reflected fully, with a swathe of dismal business activity figures last week only heralding much worse readings. Investors have also raised questions over whether measures taken by major Latin American governments to combat the virus will suffice. Economic growth in the region was already strained at the beginning of the year, and is likely to get worse due to the outbreak. Mexico's peso rose sharply, bouncing back from a record low touched on Monday as markets balked at the country's measures to combat the economic shock from the coronavirus. "Mexico's economy is likely to plunge deeper into recession this year, even as the federal government's belated measures to control the spread of the coronavirus will add to growing risks ahead," TS Lombard wrote in a note. "The peso will test new record lows as the Covid-19 healthcare crisis mounts, forcing Banxico to remain conservative on its rate-cutting cycle ahead." Brazil's real added 1.3%, while the Chilean peso rose 1.6%. The MSCI's index of Latin American currencies was set to firm for a second straight session, as it recovered from a more-than four year low. Key Latin American stock indexes and currencies at 1319 GMT Stock indexes Latest Daily % change MSCI Emerging Markets 882.75 3.39 MSCI LatAm 1666.00 5.86 Brazil Bovespa 78602.04 6.11 Mexico IPC 35020.32 1.86 Chile IPSA 3788.07 1.06 Colombia COLCAP 1195.79 3.07 Currencies Latest Daily % change Brazil real 5.2157 1.42 Mexico peso 23.8800 3.13 Chile peso 836 1.70 Colombia peso 3891.5 2.26 Peru sol 3.3698 0.59 Argentina peso 65.0500 -0.09 (interbank) (Reporting by Ambar Warrick in Bengaluru; Editing by Sandra Maler)