* Chilean peso lower before monetary policy move * Mexican peso reverses early declines * Latam currencies index set for weekly declines (Updates prices throughout) By Shreyashi Sanyal Oct 15 (Reuters) - Chile's peso hit its lowest level in nearly two months on Thursday ahead of a monetary policy decision by the central bank later in the day, while other Latin American currencies were range bound as the dollar gained on dwindling risk sentiment. The Chilean peso fell 0.6%, extending its declines to the fourth straight day, ahead of a policy decision by the country's central bank at 5 p.m. ET, with analysts expecting the benchmark rate to be left unchanged at 0.5%. "We think that the bank will mention that the economic recovery is ongoing, but that recent activity data was below expectations due to weakness in the mining sector," said Alonso Cervera, managing director of emerging markets economics research at Credit Suisse. "We expect the bank to reiterate that it will maintain an elevated monetary impulse for a 'prolonged period'." The MSCI's index for Latin American currencies fell 0.5%, in what is shaping up to be its first weekly decline in three weeks. The halting of two high-profile COVID-19 vaccine trials this week and the lack of more promising economic data have investors avoiding riskier assets. The dollar rose on signs the U.S. economy was stalling while fiscal stimulus appeared unlikely before the U.S. presidential election and on worries about new lockdowns in major European countries where cases were spiking. Brazil's real fell 0.1% against the dollar, but most declines were limited after a central bank indicator showed domestic economic activity rose 1.06% in August. The country's central bank also said in a report on financial stability that more Brazilian companies were likely to file for bankruptcy protection by year-end. Mexico's peso rose 0.2% after central bank deputy governor Jonathan Heath said the country's economy could potentially see growth above 12% in the third quarter, based on economic modeling. Colombia's peso fell 0.3%, giving back gains made in the previous session as the oil producer fell on weaker crude prices. The Argentine peso steadied after dropping on Wednesday when President Alberto Fernandez said the country will not devalue its currency or seize bank deposits despite a financial crisis compounded by the COVID-19 pandemic. Latin American bourses followed Wall Street into the red, with MSCI's index for Latam stocks falling 0.8%. Key Latin American stock indexes and currencies at 1935 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1120.68 -1.31 MSCI LatAm 1913.82 -0.79 Brazil Bovespa 99298.81 -0.04 Mexico IPC 38034.02 0.02 Chile IPSA 3661.39 -0.08 Argentina MerVal 48009.69 1.511 Colombia COLCAP 1162.44 -0.76 Currencies Latest Daily % change Brazil real 5.6082 -0.12 Mexico peso 21.3010 0.15 Chile peso 803.2 -0.60 Colombia peso 3848.25 -0.29 Peru sol 3.5807 0.25 Argentina peso (interbank) 77.4700 0.01 Argentina peso (parallel) 167 0.00 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by David Gregorio and Andrea Ricci)
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