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EMERGING MARKETS-Brazil's real jumps 2% on upbeat data, higher iron ore prices

    * Brazil manufacturing activity jumps at record pace in
August
    * LatAm equities track best day since June
    * Chilean peso climbs ahead of central bank meeting
    * Mexican peso firms as pace of slide in business conditions
eases
    * EM bonds, stocks inflows continue but decelerate in
August-IIF

    By Sagarika Jaisinghani
    Sept 1 (Reuters) - Brazil's real jumped 2% and Latin
American equities tracked their best day in three months on
Tuesday as iron ore prices climbed and data signaled a solid
recovery from the COVID-19 pandemic.
    The real was up 2.1%, recovering from a slide in the
previous session due to data showing a deterioration in the
country's finances to shore up the economy during the pandemic.
    "Concerns about the future development of Brazilian state
finances remain the dominating factor," said Commerzbank analyst
Esther Reichelt.
    "Over the past weeks, the real had come under pressure when
suspicions arose that (the spending) cap was going to be avoided
or watered down (and) ... the FX market will continue to react
nervously to any news in this context."
    The real has been hammered this year - down about 25% at
record lows - as the pandemic wiped out growth, with figures
showing a record contraction in Latin America's biggest economy
in the second quarter.
    But latest data confirmed Brazilian manufacturing expanded
at a record pace in August, with employment hitting a 10-year
high. The country's stock index jumped 2.4%, also
propelled by a 2.5% gain for miner Vale SA on the
back of higher iron ore prices.
    An index of Latin American currencies firmed
1.8% to its highest in nearly one month, with the global outlook
picking up following robust manufacturing surveys from some of
the world's biggest economies.
    Among regional currencies, gains were led by the Chilean
peso as data showed a smaller-than-feared decline in
economic activity. All eyes are now on a central bank meeting
later in the day, where it is expected to keep interest rates
unchanged.
    "We think the bank will reiterate that it will keep a strong
monetary impulse for a prolonged period and that the rate will
likely remain at its technical minimum of 0.5% over the policy
horizon," said Alonso Cervera, managing director of emerging
markets economics research at Credit Suisse.
    The Colombian peso jumped 1.6% a day after the
central bank trimmed interest rates, as expected.
    The Mexican peso firmed 0.5% against a weaker dollar.
Local surveys showed factories were still hurting last month
from the pandemic, with production falling and firms cutting
workers, but the pace of the slide in business conditions eased
for a fourth straight month.
    A basket of emerging market equities jumped
3.4% and was on course for its strongest session since June.
    Emerging market stocks and bonds saw foreign net inflows in
August, but the pace of flows has sharply slowed since June,
data from the Institute of International Finance showed on
Tuesday.    
        
    Key Latin American stock indexes and currencies:    
     Stock indexes              Latest      Daily % change
 MSCI Emerging Markets           1116.17                1.33
                                          
 MSCI LatAm                      2002.03                3.44
                                          
 Brazil Bovespa                101736.55                2.38
                                          
 Mexico IPC                     37237.07                1.08
                                          
 Chile SPIPSA                    3757.46               -0.26
                                          
 Argentina MerVal               46853.09               0.038
                                          
 Colombia Colcap                 1232.74                1.37 Currencies              Latest      Daily % change
 Brazil real                      5.3663                2.12
                                          
 Mexico peso                     21.7770                0.47
                                          
 Chile peso                        769.5                0.91
                                          
 Colombia peso                   3680.18                1.62
 Peru sol                         3.5208                0.59
                                          
 Argentina peso (interbank)      74.2400               -0.08
                                          
 

 (Reporting by Sagarika Jaisinghani in Bengaluru
Editing by Alistair Bell)
  
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