By Shreyashi Sanyal and Ambar Warrick
July 17 (Reuters) - Brazilian stocks touched their highest level in nearly 4-1/2 months on Friday, while most Latin American currencies fell and were set for weekly losses as concerns over the coronavirus held back buying of risk-driven assets.
The Bovespa stock index .BVSP added around 2% for the day, trading about 13% off pre-pandemic levels. The index was set for a weekly gain of about 2.5%.
Coronavirus infections in Brazil no longer appear to be rising exponentially, but the country is "still in the middle of this fight" as new cases and deaths grow by thousands every day, the World Health Organization said.
The country is the second-worst hit by the pandemic in the world, behind the United States.
"We expect markets to focus on news regarding the evolution of COVID-19, for that will determine how fast and far social distancing protocols are relaxed and through it the pattern and strength of the expected 2H2020 economic recovery," Goldman Sachs analysts wrote in a note.
While news of progress on a COVID-19 vaccine gave risk assets a slight boost earlier in the week, growing global cases and more signs of economic duress undercut any optimism.
Brazil's real BRBY, BRL= declined 1% against the dollar and was set to underperform most regional peers on the week.
Continued interest rate cuts from the central bank due to the coronavirus have seen investors pivoting into equities from the currency and fixed-income markets in search of better returns. The trend can be observed across Latin America, with most currencies set to lose for the week.
Chile's peso CLP= was set to be the sole weekly gainer, supported by strong prices in copper, the country's top export. MET/L
The Mexican peso MXN= slipped against the dollar on Friday and was set to end the week marginally lower.
A former boss of Mexican state oil company Petroleos Mexicanos, Emilio Lozoya, faced corruption charges that could envelop leaders of the previous government. Lozoya was taken to a hospital early on Friday shortly after his overnight extradition to Mexico from Spain.
Argentine stocks .MERV outperformed their peers for the week with a 6% gain, as investors continued to watch for progress in the country's sovereign debt restructuring.
The country is set to ease a lockdown that has lasted nearly four months in and around Buenos Aires, after tougher restrictions this month helped slow the spread of new COVID-19 infections.
Key Latin American stock indexes and currencies:
Daily % change
MSCI Emerging Markets .MSCIEF
MSCI LatAm .MILA00000PUS
Brazil Bovespa .BVSP
Mexico IPC .MXX
Chile IPSA .SPIPSA
Argentina MerVal .MERV
Colombia COLCAP .COLCAP
Daily % change
Brazil real BRBY
Mexico peso MXN=D2
Chile peso CLP=CL
Colombia peso COP=
Peru sol PEN=PE
Argentina peso (interbank) ARS=RASL
Weekly performance of Latam risk assetshttps://tmsnrt.rs/3fL0FBi
(Reporting by Shreyashi Sanyal in Bengaluru; editing by Jonathan Oatis and Leslie Adler)
((Shreyashi.Sanyal@thomsonreuters.com; +1 646 223 8780; +91 961 144 3740; Twitter: https://twitter.com/s_shreyashi;))
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