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EMERGING MARKETS-Latam FX gains with Mexican peso at 6-mth high; Stocks rise

    * Colombia's public debt could climb the equivalent of 10%
of GDP
    * EM economies and markets running on fumes - SocGen
    * Political uncertainty weighs on Peru's sol
    * Brazil, U.S. central bank meetings eyed this week

 (Adds details, updates prices)
    By Susan Mathew and Ambar Warrick
    Sept 14 (Reuters) - Latin American currencies firmed against
a weaker dollar on Monday, while regional stocks were set for
their best day in two weeks in tandem with a recovery on Wall
Street. 
    The dollar slipped ahead of the U.S. Federal Reserve's
policy announcement on Wednesday, while U.S. stocks rose in
anticipation of a continued accommodative stance from the
central bank.
    The MSCI's index of regional stocks rose
more than 2%, while Mexico's peso was at its highest level since
early-March.
    A central bank meeting in Brazil and minutes of Chile's last
rate meeting are also awaited this week, with both banks
expected to keep interest rates at low levels to tide their
economies through the coronavirus pandemic.
    While several emerging market currencies have recovered from
pandemic-driven lows, doubts persist over the economic strain
faced by the developing world, and whether a swift recovery is
in order.
    Scope for further policy accommodation by emerging market
central banks may be dwindling, analysts at Societe Generale
wrote in a note.  
    "EM is running on fumes, suggesting downside risks exceed
upside potential," they said. 
    "EM now sorely lacks a compelling impetus for investment,
with growth drivers weak and yield compensation low. ... EM
currencies are running on empty without capital inflows or a
resounding macro narrative."
    Colombia's public debt could climb the equivalent of 10% of
gross domestic product this year due to the coronavirus
pandemic, the country's comptroller said on Friday, warning that
this could affect efforts to reduce poverty and unemployment.

    The Colombian peso was slightly stronger, while
stocks dropped 0.8%.
    Brazil's real rose 1.2%. Data showed economic
activity continued to rebound in July, but at a much slower pace
than expected.   
    On Wednesday, Brazil's central bank will likely keep its
benchmark rate unchanged and adopt a neutral view, a Reuters
poll showed. 
    The real remains one of the worst-performing EM currencies
this year. Amid worries about Brazil's fiscal standing, Economy
Mister Paulo Guedes on Monday said the government will break its
spending cap rule at some point unless mandatory spending tied
to inflation is de-indexed.
    Peru's sol was flat after Congress approved a motion
to start impeachment proceedings against Peruvian President
Martin Vizcarra over leaked audio tapes and alleged ties to a
singer involved in a fraud case.
    "(The political uncertainty) will likely erode further
business sentiment and investment prospects, which may have
negative consequences in the much-needed economic recovery,"
said Credit Suisse analyst Alberto J. Rojas.
        
    Key Latin American stock indexes and currencies:
    
    Stock indexes             Latest       Daily % change
 MSCI Emerging Markets         1104.56                  1.17
                                        
 MSCI LatAm                    2012.78                  2.16
                                        
 Brazil Bovespa              100276.67                  1.95
                                        
 Mexico IPC                   37012.44                  1.86
                                        
 Chile IPSA                    3711.59                 -0.03
                                        
 Argentina MerVal             44620.49                 -2.66
                                        
 Colombia COLCAP               1202.67                 -0.81 Currencies             Latest       Daily % change
 Brazil real                    5.2708                  1.17
                                        
 Mexico peso                   21.0860                  0.86
                                        
 Chile peso                      765.1                  0.69
                                        
 Colombia peso                 3689.63                  0.39
 Peru sol                       3.5598                  0.33
                                        
 Argentina peso                75.1100                 -0.27
 (interbank)                            
                                        
 
    

 (Reporting by Susan Mathew in Bengaluru; Editing by Andrea
Ricci and Jonathan Oatis)
  
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