* Brazil's real down nearly 5% for Q2 * Brazil stocks set to outperform broader EM in Q2 * Broader Latam risk assets down for the day * Argentine peso among worst Q2 performers By Ambar Warrick June 30 (Reuters) - Brazil's real led losses among Latin American currencies on Tuesday on a raft of weak data, while the country's stocks were set for steep quarterly gains as investors sought better returns in equities. The real was down 1.3%, and set to lose nearly 5% for the second quarter of 2020. This came after its worst quarterly loss in nearly 17 years. The currency, which was once considered a viable option for carry trade, saw its standing slowly slip this year on continued rate cuts by Brazil's central bank, as well as uncertainty over the coronavirus pandemic. Conversely, Brazilian stocks were set to add 30% for the quarter, their best performance since 2003, as they recovered from sharp losses in the prior quarter. The Bovespa index was set to outperform a 17% rise in its broader emerging market peers for the quarter. "The lower returns from sovereign fixed-income instruments have forced investors out of their traditional comfort zone of higher-yielding government bonds and into riskier assets, and this has been a major factor in the resilient domestic equity market in Brazil," wrote Wilson Ferrarezi, Brazil Economist at TS Lombard. For the day, stocks fell about 0.3% after data showed Brazil's national debt and government deficit hitting record highs in May. Separate data showed the country's unemployment rate hitting a two-year high. Other Latin American risk assets also fell, as a spike in coronavirus infections in the developed world raised concerns over new curbs on social and business activity. Mexico's peso fell 0.5%, tracking weakness in oil prices. Still, the currency was set to add about 2.3% for the quarter. Mexican stocks dropped about 0.5%, but were set for their best quarter since 2011. Chilean stocks traded flat, while Colombian equities shed 0.2% as both markets resumed trade after a long weekend. Argentina's peso was among the worst quarterly performers in Latin America, as investors continued to fret over the country's negotiations with its sovereign debt holders. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 995.33 0.14 MSCI LatAm 1867.90 -1.06 Brazil Bovespa 95424.00 -0.33 Mexico IPC 37588.03 -0.48 Chile IPSA 3986.65 -0.11 Argentina MerVal 39348.42 -2.381 Colombia COLCAP 1109.05 -0.14 Currencies Latest Daily % change Brazil real 5.4965 -1.32 Mexico peso 23.1705 -0.48 Chile peso 822.8 -0.41 Colombia peso 3758.65 -0.33 Peru sol 3.5347 -0.20 Argentina peso 70.4500 -0.07 (interbank) (Reporting by Ambar Warrick in Bengaluru; Editing by Sandra Maler)
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