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EMERGING MARKETS-Latam stocks extend gains, FX firms on global stimulus hopes

By Ambar Warrick and Susan Mathew

* Mexican peso posts biggest gain in 9 years * Argentine stocks jump 10% after two-day break * Latam stocks down nearly a third in March (Adds details on Argentina, updates prices) By Ambar Warrick and Susan Mathew March 25 (Reuters) - Latin American stocks extended their rally on Wednesday, while currencies recovered ground amid increasing optimism over stimulus measures aimed at combating the economic shock from the coronavirus outbreak. Stocks in Brazil, Chile and Mexico added to gains made on Tuesday, while their respective currencies recovered slightly from recent lifetime lows. The MSCI's index of Latin American stocks added more than 10%, adding to an 8% gain made on Tuesday. The index has shed nearly a third of its value this month. Central banks and governments around the world have taken drastic measures to cushion the blow from the coronavirus pandemic, most notably the U.S. Federal Reserve's limitless quantitative easing and Washington's $2 trillion stimulus package that awaits passage by Congress. While the measures are expected to stimulate economic growth, doubts still persisted about whether they would be effective amid widespread lockdowns due to the outbreak. "All this action is unprecedented for a condition that is as well," said Juan Perez, senior foreign exchange trader and strategist at Tempus Inc. "The 2008 crisis and World Wars saw a lot of money move too, but this is giving out while no one can act." All the stimulus announcements eased the rush to the dollar. Mexico's peso added 3.8%, its best intraday gain since 2011 as data on Wednesday showed Mexican retail sales rose 0.5 percent in January from December. Brazil's real firmed 1.7% after data showed services activity grew more than expected year-on-year in January, while according to a mid-month measure of consumer inflation virtually evaporated in March, as air travel costs plunged. Separate data showed Brazil posted its widest current account deficit in over four years in February. But presidents of both Mexico and Brazil have been criticized for being lax about the outbreak, urging citizens to go out to restaurants and to work, while an increasing number of countries are going into lockdowns to contain the spread of the virus. "Yes, you do want to minimize inactivity, but Latam giants like Brazil and Mexico must join the chorus if those economies are to be perceived as healthy later on," Tempus Inc's Perez said. "Your economy must look fully ready to go back into full throttle. That will only happen when it is guaranteed that is safe to work and socialize." Argentine stocks resumed trade with a 10% jump, after a two-day holiday, while the peso declined slightly. Reuters exclusively reported that soybean deliveries to crushing plants have been severely cut in Argentina, the world's top supplier of soymeal livestock feed, as the country reacts to the coronavirus pandemic. Key Latin American stock indexes and currencies at 1940 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 839.86 4.77 MSCI LatAm 1651.32 10.23 Brazil Bovespa 76360.76 9.51 Mexico IPC 35995.11 4.14 Chile IPSA 3123.51 7.9 Argentina MerVal 26455.66 10.738 Colombia COLCAP 1042.59 12.89 Currencies Latest Daily % change Brazil real 5.0156 1.28 Mexico peso 23.9200 3.79 Chile peso 844.5 0.08 Colombia peso 4064 1.13 Peru sol 3.4758 1.23 Argentina peso 64.0475 -0.43 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Alistair Bell)