(Recasts throughout, updates prices) By Susan Mathew March 20 (Reuters) - Most Latin American currencies and stocks jumped on Friday after the U.S. Federal Reserve affirmed its patient stance, abandoning rate hikes for the rest of the year, hammering the dollar. Amid a slowing economy the Fed now sees only one rate hike next year, and announced a plan to end its balance sheet reduction program by September. Mexico's peso leapt 1 percent to a five-month high, while Brazil's real firmed up to 1.3 percent before closing 0.3 percent higher against a significantly weaker dollar. "I think the initial reaction tells a lot about what the medium to long term impact is going to be. Neutral Fed this year and balance sheet taper ending, that is going to be positive for risk," said Sacha Tihanyi, deputy head of emerging markets strategy at TD Securities. A steady move higher in U.S. interest rates had sucked money out of high-yielding bets in the developing world over the last year, prompting currency sell-offs or crises in Argentina, Turkey and India among others. Bulls in Brazil's real were also watching for the local central bank's rate decision, the first under new central bank chief Roberto Campos Neto, after market close. The bank kept rate unchanged, as expected and a Reuters poll showed them staying on hold possibly for the rest of the year. "The meeting communique will mostly stick to the same script, despite weaker economic data since the last meeting," wrote Citigroup analysts, saying a new central bank head doesn't typically come off as dovish at the start of the tenure, and that room for rate cuts depends on passing the pension reform. "The market might be disappointed by a lack of dovish signals. But, any pullback will be limited in our view," they said. Currencies of Chile and Colombia rose 0.8 percent and 0.3 percent, respectively, with the Colombian peso clocking its seventh straight day of gains. The Argentine peso dipped 0.8 percent on hedging among private investors. Among stocks, Mexican shares surged 1.8 percent to their best one-day gain in almost four months, while Argentine and Colombian stocks climbed more than 1 percent each, with the latter hitting a more than four year high. Brazil shares, however, closed 1.6 percent lower on broad-based losses, as focus remained on passage on the much anticipated pension reforms as it makes it way through Congress. The index had hit new highs multiple times over the past few sessions, and has gained 3.3 percent so far this month. Key Latin American stock indexes and currencies at 2100 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1068.47 -0.23 MSCI LatAm 2869.37 -0.87 Brazil Bovespa 98041.37 -1.55 Mexico IPC 43156.21 1.83 Chile IPSA 5245.09 -1.14 Argentina MerVal 34792.18 1.22 Colombia IGBC 13327.64 1.21 Currencies Latest Daily % change Brazil real 3.7761 -0.29 Mexico peso 18.8283 0.98 Chile peso 661.95 0.73 Colombia peso 3086.5 0.32 Peru sol 3.292 0.18 Argentina peso 40.8100 -0.64 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Lisa Shumaker)
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