* Mexican peso among few gainers * Factory activity in Mexico and Brazil crumbles * Chile's peso eyes worst day in over two weeks (Adds comment, updates prices) By Susan Mathew and Ambar Warrick May 4 (Reuters) - Brazil's real led declines in Latin American currencies on Monday as a swathe of dire manufacturing data and rising China-U.S. tensions dented risk sentiment. MSCI's index of Latam currencies fell nearly 0.3%. Its stocks counterpart slid 2.2%, with regional bourses shedding 1% to 2.5%. Factory activity in Latin America's largest economies sank in April as lockdowns to stem the coronavirus outbreak shut factories and flattened demand. Adding to the pain were tensions between the United States and China, as the two traded barbs over the origin of the coronavirus outbreak. The threat of fresh U.S. tariffs on China battered risk appetite, given that Washington and Beijing were yet to fully deescalate their nearly two-year long trade war. The dollar was likely to attract more safe-haven bids in the face of increased uncertainty, which was set to further pressure emerging markets in the near term. Brazil's real weakened 1.9%, while stocks in Sao Paulo fell 2.8%. Airline Gol Linhas Aereas Inteligentes was among the biggest percentage losers on the Bovespa after it posted a loss in the first quarter, almost entirely due to the depreciation of the Brazilian currency. The real has lost 28% so far this year, almost steadily hitting new lows, making it one of the worst-performing emerging market currencies. Stymied risk appetite due to worries over the coronavirus pandemic and the related slump in commodity prices were exacerbated by political instability rocking the flailing Brazilian economy. "If the pandemic is not controlled, EM will likely be its next epicentre and EM currencies the weakest link," wrote Bhanu Baweja, global head of emerging markets cross-asset strategy at UBS. "Central banks are prioritizing lower rates to fund large deficits, not higher rates to cushion FX." Brazil's central bank is widely expected to cut rates further into negative territory later in the week, following similar measures from central banks across the globe as they shore up liquidity. Colombia's peso fell 0.8%, while the world's largest producer of copper, Chile, saw its currency set for its biggest percentage loss in two weeks as the price of the metal sank. Mexico's peso, meanwhile, rose 1% after a third straight month of losses in April. Remittances to Mexico, one of the country's main sources of foreign exchange, surged to a record high in March. Key Latin American stock indexes and currencies at 1918 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 888.60 -3.07 MSCI LatAm 1604.12 -2.15 Brazil Bovespa 78244.97 -2.81 Mexico IPC 36099.80 -1.02 Chile IPSA 3883.23 -2.37 Argentina MerVal 31976.14 -2.342 Colombia COLCAP 1116.85 -2.21 Currencies Latest Daily % change Brazil real 5.454 -1.93 Mexico peso 24.1850 1.58 Chile peso 836.2 -0.12 Colombia peso 3984.92 -0.84 Peru sol 3.3837 -0.35 Argentina peso 66.9200 -0.12 (interbank) (Reporting by Susan Mathew in Bengaluru Editing by Paul Simao and Leslie Adler)
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