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EMERGING MARKETS-Latam FX muted, Brazil real falls to near one-month low

    * Brazilian real drops for third straight day
    * Chilean peso among few Latam FX gainers
    * Mexican trade surplus narrows, but export recovery gathers
pace
    * Argentina could seek fresh funds from IMF in new deal
talks

 (Updates prices throughout; adds comments, bullets)
    By Shreyashi Sanyal
    Oct 27 (Reuters) - Latin American currencies traded in tight
spaces by Tuesday afternoon, ahead of next week's U.S.
presidential election, while Brazil's real fell for the third
straight day. 
    The real fell 1% to touch its lowest level in
25 days, pushing the MSCI's index for Latin American currencies
 0.6% lower. 
    Worries about the Brazilian government's ability to fund a
new fiscal program have persisted despite a reassuring tone from
the country's Economy Minister Paulo Guedes. 
    Investors also awaited a policy meeting of Brazil's central
bank's rate-setting committee, Copom, on Wednesday. The bank is
expected to leave its benchmark Selic rate on hold at a record
low of 2.00%.  
    "Tomorrow's monetary policy meeting was not supposed to be
an especially newsworthy event. But with investors eagerly
anticipating material changes in the policy guidance, including
a larger-than-50% chance of a 25-basis-points increase in the
policy rate at the December policy meeting," said Gustavo
Rangel, chief Latin America economist at ING. 
    Latin American currencies started the week on the back foot
on Monday, but Chile's peso rose 0.4%, extending its
winning streak to an eighth day. 
    Higher copper prices on Tuesday helped support Chile's
currency, although the focus remained on the country's beginning
the long process of drafting a new constitution after a vote in
favor of the project by citizens.
    In Sunday's referendum, 78% of voters in the world's top
copper producer backed constitutional overhaul, a stinging
rebuke of the constitution dating from the 1973-1990
dictatorship of Augusto Pinochet.
    "There is the hope that this vote will mark the end of the
protests and violence that has plagued the country for the past
year and leaves the focus firmly fixed on broader external
drivers in the short-term, such as the looming U.S. election,"
said Natalie Rivett, senior emerging market analyst.
    The U.S. dollar weakened against a basket of
currencies ahead of the U.S. elections in the coming week, while
fears remained of a second wave of coronavirus infections.

    "A Biden victory and/or 'blue wave' is considered mostly
positive for EM assets," IGM's Rivett said. 
    Mexico's peso fell 0.1% against the dollar, with
figures showing the country's trade surplus with the rest of the
world shrank in September as imports picked up faster than
exports during a burgeoning recovery from the coronavirus
pandemic.
    The Colombian peso edged 0.2% higher as oil prices
 regained some lost ground, while the focus
remained on the country's central bank meeting later in the
week.  
    The Argentine peso edged lower. The country could
request more money from the International Monetary Fund (IMF) as
part of the talks to renegotiate its 2018 standby agreement, an
IMF official in Argentina said. 

    Key Latin American stock indexes and currencies at 1917 GMT:
    
          Stock indexes                   Latest   Daily
                                                     %
                                                   change
 MSCI Emerging Markets                    1132.77    0.19
 MSCI LatAm                               1920.25   -1.74
 Brazil Bovespa                          99539.38   -1.46
 Mexico IPC                              38008.35   -0.62
 Chile IPSA                               3697.24   -0.24
 Argentina MerVal                        47500.05  -4.227
 Colombia COLCAP                          1164.18    -1.1
                                                         
              Currencies                  Latest   Daily
                                                     %
                                                   change
 Brazil real                               5.6742   -1.12
 Mexico peso                              20.9437   -0.14
 Chile peso                                 772.3    0.35
 Colombia peso                             3807.6    0.14
 Peru sol                                  3.6068   -0.08
 Argentina peso (interbank)               78.3000   -0.05
                                                   
 Argentina peso (parallel)                    177    7.34
                                                   
 
 (Reporting by Shreyashi Sanyal in Bengaluru
Editing by Marguerita Choy and Jonathan Oatis)
  
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