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EMERGING MARKETS-Latam markets aided by soft dollar, Argentine peso down on inflation data

By Sruthi Shankar

(Updates market prices) By Sruthi Shankar Oct 16 (Reuters) - The Brazilian real bounced off two-week lows on Thursday and the Mexican peso rose against the dollar on weak U.S. data, but Latin American markets were range-bound with fresh strains in U.S.-China trade talks. The real rose 0.6% after a recent run of losses fueled by sluggish data in the region's largest economy. The Mexican peso hit a fresh two-month high as the dollar fell after U.S. retail sales data painted a gloomy economic picture and supported the case for further interest rate cuts by the Federal Reserve. Other currencies such as the Colombian and Chilean pesos weakened on concerns about trade disputes and global growth. The U.S. House of Representatives on Tuesday passed four pieces of legislation taking a hard line on China, with three related to pro-democracy protests in Hong Kong. The measures came as Washington engaged in delicate talks with Beijing over their bruising trade war. U.S. President Donald Trump on Wednesday said he likely would not sign any trade deal with China until he meets with Chinese President Xi Jinping at the upcoming APEC Forum in Chile. "News flow on trade and events remains a source of choppiness in a market where the macro backdrop is weak, but policy backstop continues to keep asset valuations at elevated levels," Oxford Economics analysts wrote in a note. "Even in the absence of a major sell-off, the underlying performance variation shows low confidence in growth." The Argentine peso fell over 2% after data showed consumer prices rose 5.9% in September, its sharpest jump in a year, amid a flaring economic crisis in Latin America's No. 3 economy. However, stock markets in the region broadly rose, with Brazil's Bovespa jumping 0.8%. Shares in state-run power firm Eletrobras gained 5% after it said that laying off third-party employees at its unit Furnas Centrais Eletricas will generate cost savings of about 280 million reais per year. Shares of Vale fell 2.5% as Dalian iron ore futures slumped after China's top steelmaking city of Tangshan issued a second-level smog alert that requires mills to further limit operations. Mexico's IPC index advanced, led by a 3.3% rise in shares of America Movil after the country's largest telecom provider said it was open to discussing a deal with Oi SA, amid speculation that the Brazilian telecom carrier is in talks to sell its assets. The Colombian peso slipped 0.2%, while its main stock index was flat. Analysts awaited a ruling this week by Colombia's constitutional court on the legality of a financing law that was approved late year. "While our base case does not incorporate a dissolution of the law, such a measure would be a net negative for local assets, in our view," Morgan Stanley analysts said. Key Latin American stock indexes and currencies at 1953 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1024.99 0.56 MSCI LatAm 2715.68 0.54 Brazil Bovespa 105376.36 0.85 Mexico IPC 43467.47 0.52 Chile IPSA 5150.11 -0.14 Argentina MerVal 30857.66 -1.519 Colombia IGBC 12867.39 0.07 Currencies Latest Daily % change Brazil real 4.1535 0.64 Mexico peso 19.2092 0.16 Chile peso 716.55 -0.22 Colombia peso 3456.5 -0.19 Peru sol 3.362 0.12 Argentina peso 56.00 -2.33 (Reporting by Sruthi Shankar and Susan Mathew in Bengaluru; Editing by Richard Chang)