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EMERGING MARKETS-Latam FX gains on commodity strength, benign U.S. inflation

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* Chilean peso best regional performer * EMFX rises after slow start to the day * Brazil's real lags on dismal retail sales data By Ambar Warrick Feb 10 (Reuters) - Chile's peso rose on Wednesday as copperprices hit an eight-year high, with broader Latin American andemerging market currencies gaining as the dollar dipped on signsthat underlying U.S. inflation remained benign. U.S. consumer prices rose moderately in January as thepandemic continued to weigh on the labor market and the servicesindustry. The reading raised expectations that the FederalReserve would be in no hurry to tighten policy in thenear-future, given the economy was still reeling from thepandemic. This in turn pushed up sentiment, inviting plays intorisk-driven assets across emerging markets. The dollar dropped after the data, while U.S. yields - arise in which had recently pressured EM markets - also dipped. "For right now, the Federal Reserve isn't worried aboutinflation and wants the economy to first reach full employmentbefore taking any action to combat inflation... it's not a greatpolicy for investors who rely on fixed income or risk averseinvestors who don't want to invest in stocks," said Nancy Davis,founder of Quadratic Capital Management. Chile's peso rose 1.1% to an over one-week high,extending gains into a third session as copper prices surged onexpectations that large stimulus measures and accommodativepolicies would elevate industrial demand for the metal. Oil exporter Colombia's peso rose 0.8% trackinghigher oil prices, while broader emerging market currenciesshrugged off initial losses to trade positive. Latin American stocks continued to lag theirbroader emerging market peers, the latter of which hita record high. Assets in Asia and Europe have outpaced their Latin Americanpeers, as high regional infections and concerns over fiscalhealth kept investors at bay. The real lagged its peers as retail salesslumped a far more-than-expected 6.1% in December, underliningthe drastic impact a second wave of infections had on theeconomy. Brazil is among the worst hit countries by the pandemic, andhas been struggling to rein in infections and roll out vaccines.The government recently confirmed it was considering morestimulus measures to offset the pandemic's economic ructions. But these measures could possibly overstretch fiscalspending in the country and push up risk premiums on Brazil'sdebt and currency, forcing the central bank to tighten policysooner or by more than planned, the bank's chief warned. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1421.86 0.9 MSCI LatAm 2404.45 0.22 Brazil Bovespa 118754.56 -0.6 Mexico IPC 0.00 0 Chile IPSA 4530.02 -0.28 Argentina MerVal - - Colombia COLCAP 1380.29 - Currencies Latest Daily % change Brazil real 5.3911 -0.19 Mexico peso 20.0190 0.28 Chile peso 727.2 1.05 Colombia peso 3544.69 0.84 Peru sol 3.6347 0.08 Argentina peso 88.3500 -0.09 (interbank) (Reporting by Ambar Warrick in Bengaluru;Editing by Bernadette Baum)