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EMERGING MARKETS-Latam shares and currencies rise, Argentine peso up 2 pct

(Recasts throughout, updates prices) By Susan Mathew March 15 (Reuters) - Latin American shares rose on Friday, tracking a global rally spurred by U.S.-China trade optimism, while currencies firmed as weak U.S. economic data hit the dollar.

MSCI's index of Latin American shares climbed 1.1 percent and touched a two-week high, while its regional currency index rose 0.5 percent with Argentina's peso in the lead, up 2 percent.

Chinese state new agency Xinhua reported that the United States and China, a main destination for Latin American resources exports, made further substantive progress on trade after high level talks.

Regionally, the Mexican peso - considered weather vane for trade sentiment - rose half a percent, with the dollar's weakness bolstering its moves.

The greenback took a hit after disappointing monthly U.S. manufacturing output, and factory activity in New York state, offered further evidence of a sharp slowdown in economic growth early in the first quarter.

Stocks in Mexico jumped more than 1 percent, and posted their best day in more than five weeks. This brought weekly gains to 1.6 percent, while the currency added 1.4 percent - its best in nine weeks.

Argentine shares added 1 percent, triggered by a jump in its currency, which was prompted by the Treasury's plans to sell billions in U.S. dollars to support the peso and the central bank chief's promise of new measures to curb steep inflation.

Ahead of elections in October, President Mauricio Macri is struggling to bring down prices, which rose 3.8 percent in February.

With elections coming up, the government will attack the volatility of the exchange rate at all costs to keep the rates in local currency attractive, said Pablo Castagna, director at brokerage Personal Portfolio. The peso gained 2.9 percent this week, breaking a six week losing run.

In Brazil, the benchmark stock index hit yet another all-time high, while the real firmed 0.8 percent.

Auctions to operate airport groups in Brazil, seen as a gauge for President Jair Bolsonaro's ability to attract foreign investors, being deemed a success by market participants added to the cheer among investors.

State-oil firm Petroleo Brasileiro SA rose despite a fall in oil prices as its chief executive said he eyes $10 billion of divestments in the first four months of 2019.

Latin American stock indexes and currencies at 20:45 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1057.30 0.87 MSCI LatAm 2850.72 1.11 Brazil Bovespa 99136.74 0.54 Mexico IPC 42210.46 1.04 Chile IPSA 5324.12 0.44 Argentina MerVal 33875.72 1.03 Colombia IGBC 12933.26 0.75 Currencies Latest Daily % change Brazil real 3.8131 0.78 Mexico peso 19.1996 0.54 Chile peso 669.17 0.29 Colombia peso 3120 0.66 Peru sol 3.2945 -0.099 Argentina peso 39.9700 2.03 (interbank) (Reporting by Susan Mathew in Bengaluru, Stéfani Inouye in Sao Paulo and Jorge Otaola in Buenos Aires; editing by Grant McCool)