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EMERGING MARKETS-Mexico's peso leads Latam FX lower, Stocks edge up

By Ambar Warrick and Susan Mathew

* Mexican reliance on U.S. economy point of weakness- analyst * Brazil's real down after dismal service sector survey * Colombian peso also pressured by weak crude prices (Adds details on stocks, updates prices) By Ambar Warrick and Susan Mathew March 30 (Reuters) - Mexico's peso led Latin American currencies lower on Monday as a strong dollar and sinking oil prices weighed, with further pain seeming apparent as the coronavirus outbreak rattled the global economy. Regional stocks, meanwhile, attempted to track Wall Street's move higher, with equities in Brazil, Chile and Mexico rising between 1% and 3%. However, they were miles below recent peaks, as emerging markets continued to bear the brunt of waning risk appetite in face of the coronavirus, which is likely to cause a deep global recession. Goldman Sachs analysts said Latin America's economy this year will fall into its deepest recession since World War Two, with growth shrinking 3.8%. MSCI's index of Latin American currencies fell 1.7%, hovering around a four-year low as the dollar regained its strength as the spread of the coronavirus increased safe-haven demand for the greenback. Brazil's real dropped about 1.5% after a survey showed the country's service sector confidence in March plunged at its fastest rate on record. A central bank survey showed that Latin America's largest economy is expected to shrink this year, while inflation may come in more than a full percentage point below the central bank's target. Colombia, also a crude producer, saw its peso slide 1.8% while its main stock index slipped as oil firm Ecopetrol dropped 1.3%. MEXICAN PESO HAMMERED Crude exporter Mexico's peso fell around 3%, fast approaching all-time lows hit last week as oil prices tanked to multi-year lows, piling more pressure on heavily indebted state-oil firm Pemex. The peso's plunge sparked assurances from the central bank that it would activate a swap mechanism recently established with the U.S. Federal Reserve to support liquidity in the market. On Thursday, S&P downgraded Mexico's credit rating, as well as that of Pemex, citing headwinds from slumping crude prices adding to the weak economies woes. Cristian Maggio, head of emerging market strategy at TD Securities, pointed to Mexico's reliance on the U.S. economy as a point of weakness. With the United States becoming the next epicenter of the virus outbreak and recent economic data showing a sharp turn for the worse, analysts have substantially cut growth expectations for the world's largest economy. The peso is down almost 22% so far this year. Key Latin American stock indexes and currencies at 2051 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 831.87 -1.27 MSCI LatAm 1577.58 0.08 Brazil Bovespa 74841.69 1.92 Mexico IPC 34268.73 1.39 Chile IPSA 3316.27 2.72 Argentina MerVal 24293.60 0.977 Colombia COLCAP 1132.27 -1.33 Currencies Latest Daily % change Brazil real 5.1767 -1.40 Mexico peso 24.0650 -3.17 Chile peso 851.8 -2.01 Colombia peso 4061 -1.26 Peru sol 3.4378 -0.82 Argentina peso 64.4675 -0.09 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Nick Zieminski and Dan Grebler)