EMERGING MARKETS-LatAm currencies, stocks up on risk appetite

* LatAm currencies up on US dollar weakness, risk appetite

* Brazil's real soars crossing 2-per-dollar mark

* Colombian peso gains before central bank rate decision

By Manuela Badawy

NEW YORK, May 29 (Reuters) - Latin American currencies
appreciated against the U.S. dollar and stocks rose on Friday
as yield-hungry foreign investors put their money to work in
emerging market assets -- deemed high risk.

Appetite for emerging market assets has increased as rising
optimism that the global economy is over the worst of the
recession buoyed demand for riskier securities.

The U.S. dollar plunged to five-month lows against a basket
of six major global currencies .DXY and thus supporting most
of its pairs in Latin American.

In early afternoon trading in New York, the dollar index
was 1.4 percent lower at 79.420, having earlier hit 79.372, its
lowest since mid-December. It is now down more than 6 percent
for the month, on track for its biggest monthly fall since
1985.

Brazil's real (BRBY: Quote, Profile, Research) strengthened 1.98 percent to 1.970 per
U.S. dollar, crossing the psychologically important
2-per-dollar mark for a second session in three. The currency
soared 10.4 percent in May, the biggest monthly rally since
April 2003.

Colombia's peso COP= gained 2.04 percent to 2,131.55 per
dollar before the central bank board made another 100 basis
point cut to bring its key interest rate to 5 percent.

The peso has appreciated more than 18 percent since the
lows in February when the peso weakened to more than 2,600
against the dollar.

The Mexican peso MXN= was 0.43 percent higher at 13.192
per dollar giving up some earlier gains after the central bank
said it would trim sales of Mexico's dollar reserves.

Mexico's currency and economy, which are tightly linked to
that of the United States, will depend on improvements in the
U.S. economy.

Latin American stocks rose as the Morgan Stanley Capital
International's Latin American stock index .MILA00000PUS
gained 1.54 percent to 3,046.29 reaching an 8-month high.

Brazil's Bovespa index .BVSP however, was down 0.6
percent, weighed by concerns on Wall Street over the looming
bankruptcy of automaker General Motors Corp. and data showing
much deeper-than-expected business activity slump in the U.S.
Midwest.

Peru's IGRA stock commodity-heavy index , rose 2.75
percent supported by a rise in the U.S. dollar, making
commodities priced in the U.S. unit more attractive.

Emerging market sovereign debt spreads, the premium that
investors demand for holding riskier bonds than U.S.
Treasuries, widened 10 basis points to 456 basis points above
comparable U.S. Treasuries, according to JP Morgan's Emerging
Markets Bond Index Plus (EMBI+) 11EMJ.JPMEMBIPLUS.

Brazil's global bond due 2040 BRAGLB40=RR, considered the
emerging market benchmark paper, was slightly up to bid 130.750
in price and to yield 5.146 percent.

Investors buy riskier emerging bonds because they offer
more yield than U.S. Treasuries, which are considered the
world's safest paper.

Hopes of economic recovery in the United States have hurt
conservative investments such as government bonds, and worries
over the burgeoning U.S. budget deficit have also hammered
Treasuries.