* Latam stocks set for worst day since late-Feb * Chilean election results likely market positive- GS * Strong economic data limits MXN losses By Ambar Warrick July 19 (Reuters) - Brazil's real plummeted 1.5% on Monday, leading losses across Latin American currencies on rising inflation expectations, while Chile's peso rose after moderate candidates emerged as top contenders after the country's presidential primaries. MSCI's index of Latin American currencies dropped 1.4% and headed for its worst day in nearly two weeks, as rising COVID cases sparked a sell-off in risk assets across the globe. Emerging market stocks slumped 1.9% and were set for their worst day in four months, while currencies fell 0.6%. Latin American stocks slumped 3.2%, heading for their worst day in nearly five months, tracking a broader sell off. The real fell to 5.1922 against the dollar as a weekly central bank survey showed expectations for 2021 Brazilian inflation spiked up to 6.3%, well above the central bank's year-end goal of 3.75% and more than a percentage point above the 5.25% upper limit of its wider range. While investors also penciled in more interest rate hikes by the central bank to counter the rise in prices fueled by accelerating growth and easing of COVID curbs, a significant jump in inflation could hurt Brazil's economic recovery by denting consumer spending. "Rising CPI inflation penalizes, above all, the poorest households, eroding the purchasing power of emergency aid," analysts at TS Lombard wrote in a note. "Banco Central will likely front-load rate hikes amid rising inflationary pressures." Chile's peso bucked the trend, rising as much as 0.5% as results of the primaries left leftist former student leader Gabriel Boric and center-right independent Sebastian Sichel as major contenders in November's general election. While both were surprise picks, they were viewed as being more moderate than other contenders. "The outcome of the primaries will likely be perceived as moderately market positive," Goldman Sachs analysts wrote, noting a defeat in the left-wing primary of an early communist party favorite and Sichel's reformist views. Mexico's peso fell 0.5%. But losses in the currency were mitigated by data that showed the country's economy surged by nearly 15% in June, as it recovers from the pandemic. Colombia's peso fell 0.4%, tracking declines in oil prices. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1314.47 -1.91 MSCI LatAm 2495.64 -3.24 Brazil Bovespa 124514.75 -1.15 Mexico IPC 49337.96 -1.62 Chile IPSA 4209.55 1.36 Argentina MerVal - - Colombia COLCAP 1257.13 -1.21 Currencies Latest Daily % change Brazil real 5.1922 -1.47 Mexico peso 19.9720 -0.49 Chile peso 756.9 0.10 Colombia peso 3828 -0.38 Peru sol 3.903 0.00 Argentina peso 96.3000 -0.08 (interbank) (Reporting by Ambar Warrick Editing by Tomasz Janowski)
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