* Brazil govt sees 2020 GDP falling less than previously expected * Peru names Francisco Sagasti as interim president * Chile stocks down more than 1% By Shriya Ramakrishnan Nov 17 (Reuters) - Brazil's real gained on Tuesday as an improved outlook for growth in Latin America's largest economy boosted risk appetite, while most other regional currencies weakened on concerns about the economic damage of the pandemic. The real strengthened 0.7% to the dollar, pushing MSCI's index for Latin American currencies up 0.3%. Brazil's economy ministry on Tuesday raised its 2020 economic growth forecast to a contraction of 4.5% from an earlier estimate of 4.7%, citing upward revisions to third quarter activity. The real has lost around 30% of its value against the dollar this year, making it one of the worst-performing currencies in the emerging market space, as it has been hit hard by interest rates being slashed to a record low and growing concern over Brazil's fiscal health. "Rebounding capital flows to Latam would be a particular boon to Brazil asset markets," Ilya Gofshteyn, senior EM Macro strategist at Standard Chartered wrote in a note. "There is evidence that this process is already under way, and the clearing of political hurdles in November (municipal elections) and February 2021 (congressional leadership contests) would open the door to further recovery." Equities and currencies across the rest of the region dipped, as a continued spike in coronavirus cases around the world and doubts about the timeline of vaccine distribution dented sentiment. Stocks in Chile were down more than 1%, and the peso dropped 0.3%, tracking weakness in prices of copper, the country's largest export item. Investors were also awaiting Chile's third-quarter economic growth figures, due out on Wednesday. Mexico's peso weakened 0.7%, making it the worst performer among Latam currencies, while Colombia's peso was up slightly during the day. Peru's sol rose sharply from record-low levels after centrist legislator Francisco Sagasti was elected as the country's interim president. Sagasti will be Peru's third president in a week, after the departures of Manuel Merino and Martin Vizcarra, and now faces the challenge to bring stability to the Andean nation which was already hard hit by COVID-19 and heading for its worst economic contraction in a century. "It's hard to say how stable the Peruvian political situation will be as recent stress has been largely driven by street protests, which are notoriously hard to predict," said Gustavo Rangel, chief economist, LATAM, at ING. "Initial signs appear positive, for a calmer transition, but I'd say it is still too soon to bet on a smooth transition." Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1199.84 -0.27 MSCI LatAm 2130.32 -0.12 Brazil Bovespa 105871.51 -0.52 Mexico IPC - - Chile IPSA 3999.44 -1.19 Argentina MerVal 50663.22 -0.825 Colombia COLCAP 1223.68 1.14 Currencies Latest Daily % change Brazil real 5.3992 0.73 Mexico peso 20.3797 -0.66 Chile peso 767.7 -0.29 Colombia peso 3631.61 0.11 Peru sol 3.6337 0.80 Argentina peso (interbank) 80.0100 -0.05 (Reporting by Shriya Ramakrishnan in Bengaluru Editing by Susan Fenton)
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