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EMERGING MARKETS-Mexican peso, stocks up as Trump allows tariff exemptions

(Recasts with U.S. tariff decision, updates prices) By David Alire Garcia MEXICO CITY, March 8 (Reuters) - Mexico's peso currency and stocks gained on Thursday following reports that U.S. President Donald Trump will exempt Mexico and Canada from new steel and aluminum tariffs.

The peso strengthened 0.28 percent, while the benchmark S&P/BMV IPC index gained 1.21 percent, its biggest jump since Jan. 2.

Mexican cement maker Cemex led winners on the index as its shares rose more than 4 percent.

The tariff exemptions for Canada and Mexico would start immediately with an unspecified duration, a U.S. administration official said, adding that their continuation depends partly on progress in negotiations to modernize the North American Free Trade Agreement.

Mexican and Canadian trade officials have rejected the NAFTA linkage.

Concerns that the tariffs would spark a global trade war hurt demand for commodity-linked assets elsewhere in Latin America, especially after China warned it will respond "as necessary".

Brazilian stocks were the biggest decliners among Latin American equity markets, dropping 0.58 percent and weighed down by falling prices of iron ore and a heavy batch of corporate updates.

Shares in Embraer SA dropped more than 3 percent after the planemaker reporter lower-than-expected quarterly profits due to weaker deliveries to airlines and writedowns.

Shares of Localiza Rent a Car SA, however, jumped more than 5 percent to an all-time high after fourth-quarter net income surged 27 percent.

Outside of Mexico, only Argentina's peso gained among Latin American currencies on Thursday, up 0.29 percent.

Key Latin American stock indexes and currencies at 2143 GMT: Stock indexes Latest daily % change YTD % change MSCI Emerging 1195.24 0.51 3.18 Markets MSCI LatAm 3069.19 -0.52 8.52 Brazil Bovespa 84984.61 -0.58 11.23 Mexico IPC 48240.00 1.21 -2.26 Chile IPSA 5576.37 0.48 0.21 Chile IGPA 27909.01 0.38 -0.26 Argentina MerVal 32822.60 0.24 9.17 Colombia IGBC 11428.84 0.3 0.51 Venezuela IBC 4928.78 1.25 290.20 Currencies Latest daily % change YTD % change Brazil real 3.2675 -0.18 1.40 Mexico peso 18.6585 0.28 5.58 Chile peso 605.6 -0.50 1.49 Colombia peso 2875 -0.33 3.72 Peru sol 3.258 -0.15 -0.64 Argentina peso 20.3500 0.29 -8.60 (interbank) Argentina peso 20.46 0.20 -6.01 (parallel) (Reporting by Bruno Federowski in Brasilia and David Alire Garcia in Mexico City; Editing by Jonathan Oatis and Rosalba O'Brien)