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EMERGING MARKETS-Latam markets mixed amid U.S.-China trade tensions, recovery hopes

Susan Mathew

By Susan Mathew June 1 (Reuters) - Latin American currencies struggled for direction on Monday, as caution prevailed because of persistent trade tensions between Beijing and Washington and investors kept a close eye for any economic consequences of violence in major U.S. cities. Brazil's real swung between looses and gains, while Chile's peso traded flat against a weaker dollar. As oil prices declined, Colombia's peso lost 0.1%. Mexico's peso firmed 0.7% in line with broader emerging market peers which rallied on hopes of an economic recovery as governments ease restrictions that were imposed on economic activity to contain the spread of the novel coronavirus. Some relief also stemmed from Washington stopping short of imposing new tariffs or sanctions on Beijing and left the so-called Phase 1 trade deal intact while responding to China's new security law on Hong Kong. But sources said China has asked state-owned firms to halt purchases of soybeans and pork from the United States, after U.S. President Donald Trump revoked Hong Kong's special status under U.S. law. Regionally, Brazil's economic pictured remained grim with a central bank survey showing the 2020 outlook for the economy deteriorated for a 16th week in a row, to a new consensus of a 6.25% contraction. Stocks benchmarks in Latin America seesawed as the breakout of violent protests in the United States in response to police brutality weighed on Wall Street. MSCI's index of Latam shares rose 1.5% as surging iron ore prices buoyed mining giant Vale, while heavily weighted big banks in Brazil also gained. The riots may harm economic activity in the United States, especially given that many states have just begun unlocking their economies, said Hussein Sayed, chief market strategist at FXTM. Markets could react more strongly if the protests begin to spiral out of control and potentially lead to transmission of the coronavirus. Latin American stock indexes and currencies at 1400 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 948.32 1.93 MSCI LatAm 1795.79 1.2 Brazil Bovespa 87756.33 0.4 Mexico IPC 36057.44 -0.18 Chile IPSA 3639.49 -0.22 Argentina MerVal - - Colombia COLCAP 1098.18 0.21 Currencies Latest Daily % change Brazil real 5.3515 -0.24 Mexico peso 22.0008 0.76 Chile peso 802.3 0.52 Colombia peso 3730.5 -0.12 Peru sol 3.4228 0.12 Argentina peso 68.6200 -0.12 (interbank) (Reporting by Susan Mathew in Bengaluru; editing by Grant McCool)