* Brazilian real at highest level since June 16 * Brazil's tax reform push a step in the right direction- analysts * Mexican retail sales inch up in May * Argentina's $65 bln debt deal inches closer despite standoff By Shreyashi Sanyal July 22 (Reuters) - Brazil's real jumped on Wednesday as tax reform proposals to congressional leaders were well-received by investors in the face of improving industrial confidence in Latin America's largest economy, even as U.S.-China tensions rose. The real firmed 2% to more than a one-month high after Economy Minister Paulo Guedes on Tuesday delivered the first part of the government's proposals to congressional leaders, which will combine two federal consumption taxes into a single value added tax. Analysts at Capital Economics said the push by Brazil provided a welcome sign that the government's reform agenda is still progressing, despite the political infighting caused by the handling of the coronavirus crisis. "If implemented, the main benefits would accrue over the longer-term by improving potential GDP growth. More immediately, it would probably help to lower longer-term bond yields." In another encouraging sigh, data showed Brazilian industrial confidence rose sharply in July, extending the rebound initiated in May as the outlook for the coming months across the sector continued to brighten. Mexican and Chilean pesos also firmed against a weaker dollar, shrugging off the latest form of escalation between U.S.-China relations after the United States told China to close its consulate in Houston. Data showed Mexican retail sales nudged up 0.8% in May from April, but posted another massive drop on an annual basis due to lockdown measures adopted in the coronavirus pandemic, while a separate survey by Citibanamex showed Mexico's central bank will likely cut its interest rate by 50 basis points at its next monetary policy meeting in August. Argentina and its creditors are likely to find a way to seal a $65 billion debt restructuring deal, analysts said, despite a standoff after bondholders joined forces to reject a government proposal and put forward one of their own. The Argentine peso was flat. The Peruvian sol weakened against the dollar as civil unrest hit the country. Protesters attacked a convoy of vehicles from the Las Bambas mining group, one of the country's largest copper producers, and set fire to some of them. Key Latin American stock indexes and currencies; Stock indexes Latest Daily % change MSCI Emerging Markets 1077.83 -0.74 MSCI LatAm 2106.85 1.88 Brazil Bovespa 104831.49 0.5 Mexico IPC 37057.20 0.48 Chile IPSA 3869.67 -0.45 Argentina MerVal 46738.98 -0.09 Colombia COLCAP 1163.40 -0.28 Currencies Latest Daily % change Brazil real 5.1065 2.04 Mexico peso 22.2820 0.23 Chile peso 767.2 0.51 Colombia peso 3626.26 -0.12 Peru sol 3.5027 -0.26 Argentina peso 71.7700 -0.07 (interbank) Argentina peso 128 3.13 (parallel) (Reporting by Shreyashi Sanyal in Bengaluru Editing by Marguerita Choy)
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