EMERGING MARKETS-Rising commodity prices propel Latam FX; Hering soars on rejecting merger

* Currencies of Chile, Colombia rise over 1% * Peru's sol rises; GDP contraction not as bas as expected * Brazilian retailer Hering soars 27% on rejecting Arezzo offer * Petrobras raises fuel prices; shares fall By Susan Mathew April 15 (Reuters) - Higher oil and copper prices propelled the currencies of Chile and Colombia more than 1% higher on Thursday, while Brazilian retailer Cia Hering soared after rejecting an unsolicited merger offer. Chile's peso rose 1.4% to a seven-week peak as copper prices hit their highest in more than a month, while an improving demand outlook buoyed oil prices and saw exporter Colombia's peso log its best session in two weeks. Brazil's real extended gains for a third straight session. Data showed the country's February services activity posted its third-biggest surge in a decade. It is also seen posting a smaller-than-anticipated primary budget deficit next year, according to Economy Ministry budget proposals. But as Brazil teeters on the brink of recession and inflation surges above the official year-end target, the outlook for the economy is bleak, complicated further by the unabated spread of COVID-19 cases. The International Monetary Fund on Thursday reiterated the need to control the pandemic in Latin America in order to catch up with faster growth in the rest of the world. "Worsening virus outbreaks and tighter lockdown measures are weighing on economic recoveries across Latin America, particularly in Brazil and Chile," said Nikhil Sanghani, a Latam economist at Capital Economics. "Rapid progress with vaccinations may allow Chile's economy to turn a corner before long, but the rest of the region is likely to struggle in the coming months." Mexico's peso hit a two-month high, while Peru's sol brushed off data that showed the economy shrank 4.18% year-on-year in February as the contraction was less than expected. Shares of Cia Hering jumped 27% after the apparel retailer rejected an unsolicited tie-up offer from competitor Arezzo Industria e Comercio. But the Bovespa stock index retreated from three-week highs, as shares of oil giant Petrobras weighed. Petrobras said it will raise the average price of diesel at refineries by about 3.8% and gasoline by 1.9%. This comes after its chief executive was ousted recently by Brazil's President Jair Bolsonaro over increasing fuel prices. Elsewhere, Turkey's lira rose 0.7%, erasing session losses made on the central bank dropping its pledge to decisively maintain tight policy. Russia's rouble was down 0.7% against the dollar, cutting losses of up to 2%, after U.S. sanctions were not seen as having a long term impact. The move nevertheless marked a further souring of ties between Washington and Moscow. Key Latin American stock indexes and currencies at 1914 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1341.55 0.37 MSCI LatAm 2391.69 0.9 Brazil Bovespa 120535.65 0.2 Mexico IPC 48544.45 0.44 Chile IPSA 4921.27 -0.12 Argentina MerVal 47152.17 -0.31 Colombia COLCAP 1316.55 -0.33 Currencies Latest Daily % change Brazil real 5.6170 0.93 Mexico peso 19.9680 0.47 Chile peso 699.1 1.40 Colombia peso 3610.02 1.25 Peru sol 3.6247 0.17 Argentina peso 92.7200 -0.04 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Catherine Evans)