EMERGING MARKETS-Brazil real rises as weak inflation spurs bets against rate cut

    * Monthly rate of inflation in Brazil slows in August
    * Copom unlikely to cut further despite weak inflation
    * Colombian peso extends decline after Fitch warning 

 (Updates prices throughout, adds comments, bullets)
    By Susan Mathew and Shreyashi Sanyal
    Aug 25 (Reuters) - Brazil's real gained ground on Tuesday,
on track for its best session in two weeks after a glum reading
on inflation encouraged bets against further monetary easing by
the central bank.
    The real rose 1.3%, reversing a fall from earlier in
the session. 
    Data showed the monthly rate of inflation in Brazil slowed
in August, according to a mid-month measure, and the annual rate
was still slightly lower than expected by economists and below
the central bank's 2.5% floor of its target band.
    "Recent political noise surrounding the future of finance
minister Paulo Guedes, and associated jitters about the
direction of fiscal policy, have weighed on the real and bond
markets this month," said Edward Glossop, senior emerging
markets economist at Capital Economics. 
    "While the days of Copom (Brazil central bank's rate-setting
committee) hiking rates in response to market turmoil seem to be
over, it does at least suggest that another rate cut at its next
meeting is looking unlikely."    
    Separately, Brazil's balance of payments position with the
rest of the world strengthened in July, with the 12-month
current account deficit narrowing to 2% of GDP - the narrowest
gap since November, 2018.     
    But Mexico's peso rose 0.2% to stay near one-month
highs, while the Chilean peso shed 0.3%, against a weaker
    Reaffirmation that Washington and Beijing are committed to
their Phase 1 trade deal, and that the United States is
considering expediting AstraZeneca's COVID-19 vaccine candidate,
saw the greenback lose some of its safe-haven appeal.
    Stocks in Sao Paulo were last down 0.5% as shares of
miner Vale lost 2.6% after pension fund Previ reduced
its stake below 5%, and as iron ore prices fell.

    The main stock indexes in Mexico and Chile
fell, while Colombia's COLCAP rose 0.7% to a 14-week
    Colombia's currency extended declines to a fifth day
after ratings agency Fitch on Monday said Colombia could lose
its investment grade within two years as the coronavirus
pandemic shrinks its economy.
    Argentina's peso fell to new lows ahead of a Friday
deadline for creditors to approve its bond restructuring deal.
The country's central bank chief on Tuesday said the deal should
help reduce the wide gap between the currency's official and
black market exchange rates. 
    Key Latin American stock indexes and currencies at 1922 GMT:
         Stock indexes                  Latest   Daily %
 MSCI Emerging Markets                  1115.61     0.67
 MSCI LatAm                             1976.41     0.75
 Brazil Bovespa                       101833.12    -0.45
 Mexico IPC                            38095.36     0.17
 Chile IPSA                             3887.42    -1.89
 Argentina MerVal                      46506.54   -0.493
 Colombia COLCAP                        1231.72      2.2
             Currencies                 Latest   Daily %
 Brazil real                             5.5220     1.25
 Mexico peso                            21.9340     0.21
 Chile peso                               785.7    -0.32
 Colombia peso                          3863.08    -0.25
 Peru sol                                3.5858    -0.03
 Argentina peso (interbank)             73.8000    -0.09
 Argentina peso (parallel)                  134     2.24

 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru
Editing by Paul Simao and Alistair Bell)

Nuestros Estándares: Los principios Thomson Reuters.