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EMERGING MARKETS-Mexican peso bucks gloom among Latam currencies

 (Updates prices)
    By Susan Mathew
    Oct 1 (Reuters) - Mexico's peso outshone Latin American
peers on Thursday, with Brazil's real weighed by concerns about
government spending and Chile's peso falling after the country's
2021 economic growth forecast was cut.
    The Mexican peso rose 1.3%, with data showing the
country's manufacturing PMI hitting a six-month high in
September bolstering gains. The index, however, was still in
contraction territory.  
    The currency rose for the third session in 10, a period over
which it lost close to 5%.
    Brazil's real slipped 0.6% as worries remained that
the government would overshoot its spending limit. Amid data
showing public debt widened to a record, investors have been
concerned about the financing of a new fiscal aid package by
President Jair Bolsonaro's government. 
    Brazilian Economy Minister Paulo Guedes on Wednesday
appeared to row back on a government proposal that the program
be funded by tapping money earmarked for future debt payments,
saying his team had never intended to pay for the program that
way.
    "It can be expected that the debt ceiling will remain a
permanent issue," said Alexandra Bechtel, FX and EM analyst at
Commerzbank. 
    "The (pandemic) support measures have ensured Bolsonaro
receives maximum support in the polls and he is likely to expect
that the re-introduction ... will ensure that he is re-elected
in late 2022. That makes the real susceptible and limits its
appreciation potential even in times of risk-on."
    While hopes of more stimulus in the United States dented the
dollar, sentiment remained fragile as data showed U.S. weekly
jobless claims remained at recession levels, while personal
income dropped in August. 
    After more than a 1% surge last session, Colombia's peso
 fell 0.5% as crude prices slumped on demand concerns. 

    Chile's peso gave up gains of as much as 0.7% after
the growth forecast for the coming year was cut to 5% from a
previous forecast of 5.5%. But the economy is expected to fare
better in 2020 than initially expected.
    In Ecuador, President Lenin Moreno said the International
Monetary Fund's executive board approved a $6.5 billion loan for
the Andean nation that would provide financial support for
sectors affected by the pandemic. 
    Among stocks, Brazil's stocks erased early losses to
rise 0.8% and Argentina's Merval index posted its best
day in two weeks, while most others fell. 
    Mexican shares posted their sharpest one-day drop in
a month with losses more-or-less broad-based. 
    
    Key Latin American stock indexes and currencies at 1927 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets    1085.46     0.32
                                   
 MSCI LatAm               1824.87    -0.18
                                   
 Brazil Bovespa          95346.44     0.79
                                   
 Mexico IPC              36600.04    -2.29
                                   
 Chile IPSA               3634.65    -0.07
                                   
 Argentina MerVal        42560.31    3.149
                                   
 Colombia COLCAP          1165.84    -0.52
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.6537    -0.64
                                   
 Mexico peso              21.8350     1.21
                                   
 Chile peso                 786.9    -0.48
                                   
 Colombia peso            3843.25    -0.47
                                   
 Peru sol                  3.6057    -0.11
                                   
 Argentina peso           76.2400    -0.08
 (interbank)                       
                                   
 
 (Reporting by Susan Mathew in Bengaluru;)
  
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