* Chilean central bank rate decision awaited * Brazil's real down after surprise Dec deficit * China virus prompts widespread caution (Adds details, updates prices) By Ambar Warrick Jan 29 (Reuters) - Most Latin American assets edged lower on Wednesday as the markets continued to assess the Chinese virus epidemic, while Mexico's stocks and currency drew mild support from the U.S. signing of a new North American trade agreement. An increasing death toll from the Wuhan virus, as well as comments that China's economic growth may drop to 5% or even lower due to the virus, cast a pall over financial markets. China, the world's second-largest economy, is a key export destination for Latin American goods. Any economic disruptions by the virus would dent demand in the country, and would likely be reflected across the region. "It is too early at this stage to make any reliable estimate of the future trajectory of this virus – which is what markets require to find more solid ground," Rabobank analysts wrote in a note. Mexico's peso strengthened slightly to the dollar after U.S. President Donald Trump signed a new U.S.-Mexico-Canada trade agreement, introducing tougher rules on labor but leaving about $1.2 trillion in annual trade flows between the countries largely unchanged. Mexican stocks were also higher, gaining for a second straight session after fears over the Chinese virus' economic impact had triggered a mass exodus from risk assets across the globe. Brazil's real dropped after the government reported a primary budget deficit for December, as opposed to expectations of a surplus for the month. However, the overall budget shortfall for 2019, before interest payments, was about 1.3% of the country's GDP, as compared with a 1.7% deficit in 2018. Stocks in Latin America's largest economy were also lower on the day. Brazilian central bank figures showed bank lending and the financial health of borrowers ending 2019 on a positive note, as default ratios and lending spreads fell against a backdrop of strong credit growth. The Chilean peso touched its weakest level to the dollar in nearly two months, ahead of the Central Bank of Chile's decision on interest rates, expected at 2100 GMT. The bank is widely expected to stand pat on its rates while the economy recovers from the impact of violent anti-government protests, which erupted in October. The protests had caused the peso to fall nearly 15%, prompting sustained intervention by the central bank to support the currency. Markets showed little reaction after the U.S. Federal Reserve held rates steady at its Wednesday meeting, and gave no new guidance about its measures to maintain short-term liquidity in bank funding markets. Key Latin American stock indexes and currencies at 1910 GMT Stock indexes Latest Daily % change MSCI Emerging Markets 1097.88 -0.35 MSCI LatAm 2841.58 0.17 Brazil Bovespa 116216.53 -0.23 Mexico IPC 45143.84 0.95 Chile IPSA 4573.24 0.06 Argentina MerVal 40569.42 -0.637 Colombia COLCAP 1633.50 0.54 Currencies Latest Daily % change Brazil real 4.2222 -0.68 Mexico peso 18.6857 0.16 Chile peso 791.5 -0.39 Colombia peso 3385.8 -0.04 Peru sol 3.344 -0.18 Argentina peso 60.2300 -0.08 (interbank) (Reporting by Ambar Warrick in Bengaluru Editing by Marguerita Choy)
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