* Mexican peso set to outpace peers this week * Argentine stocks the sole weekly gainers * Colombian stocks fall as political unrest continues (Adds comment, updates to close) By Susan Mathew and Ambar Warrick Sept 11 (Reuters) - Mexico's peso led gains among Latin American currencies on Friday and was set for a fifth straight week of gains as industrial production data improved in July from the prior month. The currency rose about 0.6%, and was set to add about 1.2%% for the week, faring better than its peers. Data showed industrial production rose 6.9% in July on a month-on-month basis. But growth slowed significantly after rising 17.9% in June from May. "(This) suggests the economic recovery was losing momentum at the start of the third quarter – a trend which we expect to continue," said Nikhil Sanghani, an emerging markets economist at Capital Economics. "This will give impetus for the central bank to continue its easing cycle, especially with little fiscal support on the horizon." Mexico's foreign exchange commission announced two currency auctions totaling $7.5 billion using a swap line with the U.S. Federal Reserve, a move that is likely to support the peso. The government's unveiling of a fiscally lean 2021 budget earlier in the week had also helped the currency, which is close to levels prior to the coronavirus pandemic. Brazil' real fell slightly as data showed services activity in the country rose in July for a second straight month. The growth, however, was slower than forecast, suggesting the economy's rebound from the worst of the COVID-19 epidemic may not be quite so entrenched. Ahead of a central bank meeting next week, a Reuters poll showed the bank will likely hold its key interest rate steady at 2% and adopt a neutral view that is expected to continue until a tightening cycle begins in the second half of 2021. Argentina's peso continued its decline to record low territory even as rating agencies cheered the government' s recently clinched debt restructuring deal, with several provinces preparing to revamp a combined $13 billion in debt. But Argentine stocks were set to outperform their regional peers for the week, serving as the only weekly gainers in the region. Other Latin American bourses were set for moderate weekly losses as volatility on Wall Street undermined sentiment in equities. The MSCI's index of regional stocks was set to lose more than 2% this week. Colombia's peso rose slightly, while stocks were set to snap a five-week winning streak as unrest over police brutality continued. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1090.66 0.49 MSCI LatAm 1960.53 -0.54 Brazil Bovespa 98394.38 -0.45 Mexico IPC 36348.27 0.46 Chile IPSA 3713.13 0.7 Argentina MerVal 45982.95 -1.889 Colombia COLCAP 1210.31 -0.77 Currencies Latest Daily % change Brazil real 5.3359 -0.34 Mexico peso 21.3057 0.61 Chile peso 770.4 0.27 Colombia peso 3698.29 0.28 Peru sol 3.5717 -0.78 Argentina peso 74.9000 -0.08 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Marguerita Choy and Richard Chang)
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