* Brazil's real recovers from 12-week low * Stimulus hopes bring cheer to Mexican peso * U.S., Colombia to bring $5 bln in investment to rural areas * Chile's Q2 GDP plunges, but mining industry grows; peso up * Brazilian retailer Magazine Luiza jumps after results By Susan Mathew Aug 18 (Reuters) - Brazil's real rallied on Tuesday after Economy Minister Paulo Guedes put to rest speculation about his imminent departure, while Mexico's peso resumed its winning streak as the country's president said an economic recovery plan would be unveiled in two weeks. Against a sinking dollar, Brazil's real firmed 0.7%, recovering from its lowest level since May. The Bovespa stock index was headed toward its best day in three weeks, aided also by upbeat earnings from retailer Magazine Luiza. Guedes, who is the Brazil government's remaining 'super minister,' said late on Monday he had the full confidence of President Jair Bolsonaro. Speculation was rife that political pressure for more public spending could force him to quit, sending Brazil markets well into the red on Monday. The country has seen a slew of ministerial resignations in the past few months over differences with the administration, increasing political uncertainty and with it doubts about the future of reforms in the country. Lower house speaker Rodrigo Maia on Monday said he is confident congress will approve tax reform this year. FX Strategists at Citigroup warn that while Guedes' assurances that the spending cap will not be breached may calm markets for the time being, the pressure to increase public spending will remain high as long as the COVID-19 outbreak remains uncontrolled. Brazil had registered 3.4 million cases of the disease and more than 108,000 related deaths as of Monday. In Mexico, the peso rose 0.4%, up for the fifth time in six. The plan to revive the economy from the coronavirus pandemic would target sectors like construction and energy, President Andres Manuel Lopez Obrador said on Monday. Despite falling oil prices, crude exporter Colombia's peso broke a four-session losing run after officials on Monday said the United States and Colombia will work together on an investment initiative of up to $5 billion in private funds for rural areas over three years. A surge in copper prices, meanwhile, helped investors look past a 14.1% plunge in GDP of the red metal's top exporter, Chile. The country's peso was on track for its best session in a month as the data showed mining remained a bright spot, with the industry growing 1.6% despite the pandemic. Argentina's peso, returned from an extended weekend to plumb to new lows, even as creditors reaffirmed their support for the government's amended bond restructuring offer, which was filed to the U.S. Securities and Exchange Commission on Monday. Key Latin American stock indexes and currencies at 1431 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1103.64 0.33 MSCI LatAm 2000.58 1 Brazil Bovespa 101591.80 2 Mexico IPC 39112.56 -0.44 Chile IPSA 4045.37 0.11 Argentina MerVal 46967.65 -3.255 Colombia COLCAP 1151.44 -0.16 Currencies Latest Daily % change Brazil real 5.4578 0.68 Mexico peso 22.1066 0.27 Chile peso 795.5 1.45 Colombia peso 3783.45 -0.08 Peru sol 3.5768 0.03 Argentina peso 89.0000 -17.80 (interbank) (Reporting by Susan Mathew in Bengaluru;)
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