EMERGING MARKETS-Rise in commodity prices lift Latam assets as recovery hopes grow

* Mexican peso hits highest since mid-April * Colombian peso at 10-week high, Chilean peso hits 11-week high * Stocks rally on hopes of strong first half in 2021 * Negotiators with creditors may extend beyond May 22 - Argentina (Adds comments, updates prices) By Shreyashi Sanyal and Susan Mathew May 20 (Reuters) - Latin American stocks and currencies were lifted by a rise in commodity prices on Wednesday, with the Mexican peso hitting a five-week high, as markets looked to a strong post-pandemic recovery. In line with a Wall Street rally, most regional bourses traded between 0.5% and 1% higher. "The stock market is seeing the first and second quarters of 2021 as having very good results. Meaning the bounce back," said Robert Lutts, president and chief investment officer at Cabot Wealth Management Inc. "We're going to be past a lot of the troubles with COVID-19 by then and economies are going to be much more open, and we're going to a see a hidden benefit from this whole crisis: Companies are going to be much more efficient." Brazilian airline Azul shot up 13% on plans to increase daily flights by 46% in June compared with May. Other major gainers were oil giant Petrobras and iron ore miner Vale. Latin American currencies firmed against a weaker dollar despite a surging number of new COVID-19 cases in the region's largest economy, Brazil, where the political picture became cloudier after yet another resignation from President Jair Bolsonaro's government. Culture Secretary Regina Duarte resigned after roughly two months in the post, citing personal reasons. This followed resignations by the justice minister, as well as the newly appointed health minister following his predecessor's ouster in April. "The continued rapid spread of the coronavirus through Brazil means that the economy will pull out of its slump more slowly than in many other emerging markets," said William Jackson, chief emerging markets economist at Capital Economics. "And with the crisis challenging the government's stability, the risks are skewed towards further falls in the real over the next few months." But against a weaker dollar on Wednesday, Brazil's real climbed 1%. As oil prices surged, Mexico's peso jumped 2.2%, while Colombia's currency hit a 10-week high. Higher copper prices propelled Chile's peso to its highest in 11 weeks. But given the bleak near-term future, demand for real assets like gold could keep currencies on the back foot, Cabot Wealth Management's Lutts said. Recent economic data from the region has been dismal as lockdowns hit economic activity. Analysts increasingly revise expectations lower. In Argentina, there is a "big chance" for negotiations with creditors to extend beyond a May 22 deadline, Finance Minister Martin Guzman said, assuring "constructive" dialogue between parties. Key Latin American stock indexes and currencies at 1911 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 931.17 0.64 MSCI LatAm 1637.86 1.84 Brazil Bovespa 81659.61 1.14 Mexico IPC 36081.97 0.61 Chile IPSA 3739.58 0.26 Argentina MerVal 39406.14 0.044 Colombia COLCAP 1070.09 0.23 Currencies Latest Daily % change Brazil real 5.6833 1.34 Mexico peso 23.0669 2.66 Chile peso 802.7 1.88 Colombia peso 3805.31 0.70 Peru sol 3.4007 0.74 Argentina peso (interbank) 67.9900 -0.12 (Reporting by Shreyashi Sanyal and Susan Mathew in Bengaluru; editing by Jonathan Oatis and Richard Chang)