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EMERGING MARKETS-Latam stocks at over three-week high as Brazil mounts record peak

By Ambar Warrick

* MSCI's Latam stock index at highest since Nov 12 * Chile stocks, peso surge as C.bank holds benchmark rate * Argentine stocks down as C.bank chief resigns By Ambar Warrick Dec 5 (Reuters) - Latin American stocks touched a more than three-week high on Thursday, with Brazilian stocks at a record peak as the country's senate approved a military pension reform bill. Stocks took support from lingering optimism over the Sino-U.S. trade war, after a Bloomberg report as well as positive comments from U.S. President Donald Trump brewed some hope over a "phase-one" trade deal. Regional markets have also been propped up by some positive economic readings this week, with better-than-expected GDP data from Brazil, Latin America's largest economy, being the most notable. Brazilian stocks extended Wednesday's gains to touch a fresh record high, as the Senate on Wednesday approved a bill that restructures the military's career and welfare, part of President Jair Bolsonaro's government welfare reform. With a major overhaul of the pension system in October, Brazil's markets have been particularly sensitive to any progress in Bolsonaro's program of streamlining government finances and releasing money into the private sector. Chilean stocks rose to a near two-week high, while MSCI's index of Latin American stocks rose as much as 0.3%. Chile's central bank on Wednesday said it would hold its benchmark interest rate and would likely keep it there for the next several months, even as weeks of protests begin to hammer the country's economy. However, the bank also slashed its economic growth forecasts for 2019 and 2020 on Thursday, warning that the effects of weeks of unrest would linger into next year. "Though it’s too early to say, especially if the Chilean peso reverses quickly and beyond the central bank's expectations, the higher inflation forecasts bias the next move to a hike," Citi analysts wrote in a note. "As for FX, a hawkish central bank with no cuts on the horizon should help stabilize the currency, which has been plagued by its low carry." The Chilean peso rose to its strongest level against the dollar in more than two weeks. The currency has been propped up by a massive central bank stimulus program, which went into effect earlier in the week. On the other hand, Argentine stocks dropped after central bank chief Guido Sandleris resigned on Wednesday, an expected step as Latin America's third-largest economy transitions to Peronism next week under newly elected President Alberto Fernandez. MSCI's index of Latin American currencies edged lower after four straight days of gains. Key Latin American stock indexes and currencies at 2333 GMT Stock indexes Latest Daily % change MSCI Emerging Markets 1041.67 0.49 MSCI LatAm 2709.95 0.19 Brazil Bovespa 110628.48 0.3 Mexico IPC - - Chile IPSA 4732.41 1.88 Argentina MerVal 34269.94 -1.216 Colombia COLCAP 1610.27 -0.11 Currencies Latest Daily % change Brazil real 4.2104 -0.21 Mexico peso 19.3718 0.28 Chile peso 783.8 0.51 Colombia peso 3456.09 0.33 Peru sol 3.3728 0.18 Argentina peso 59.8800 0.01 (interbank) (Reporting by Ambar Warrick in Bengaluru)