EMERGING MARKETS-Latam FX gains on China; Brazil gains limited

* Mexican, Chilean peso hit 2-months highs
* Brazil's real gains, but limited by intervention worries
* Brazil's real up 0.1 pct; Mexico's peso gains 1 pct

By Rachel Uranga
MEXICO CITY, July 13 (Reuters) - Latin American currencies
strengthened on Friday after China's quarterly economic data
allayed concern of a steep slowdown in the world's second
largest economy.
Economic growth in China, the world's biggest consumer of
raw materials, was in line with expectations, spurring optimism
among investors who had feared signs the country was heading
toward a hard landing. Gains in the real, however, were limited
by fears about further intervention from Brazil.
"The market has been looking for some news that is not
completely negative, and today we had this idea that the Chinese
GDP could have been worse," said Sidnei Nehme, a director at NGO
brokerage in Sao Paulo.
The sentiment buoyed the Mexican peso, on track to
close at a two-month high, up 1.05 percent to 13.3050 against
the greenback. The Chilean peso also hit a two-month
high, firming 0.65 percent.
Chile's currency was further bolstered by a more than 2
percent jump in the price of copper, the country's main
export product.
Both currencies clocked weekly gains with Mexico's peso
strengthening about 1 percent and the Chilean currency firming
around 1.5 percent. But investors have held back, concerned
about the fragile state of the global economy.
Investors "are still waiting for further economic data,"
said Marco Oviedo, an economist at Barclays in Mexico City,
adding that next week's performance will "depend on how
investors perceive the global economy."
Eyes will be fixed on Europe and U.S. industrial production
data, he said, forecasting that the peso would likely trade
between 13.20 per dollar and 13.40.
In Brazil, the real edged up 0.11 percent to
2.0367 per dollar, but concern about possible government
intervention weighed.
Earlier this week, Brazil cut its key interest rate to a
record low in a move to kickstart its sluggish economy. At the
same time, the central bank has recently been buying and selling
dollars in the local spot market to control volatility in the
currency.
"There's very little incentive for a hedge fund or a real
money guy to bet on appreciation if there is a clear risk of
intervention to cap the move," said Diego Donadio, Latin America
currency and debt strategist for BNP Paribas in Sao Paulo.
The currency has been trading within a very narrow range
between 2.00 and 2.05 reais per dollar in the past eight
sessions.
Investors have been holding back bets in Brazil and placing
their money in Latin America's second largest economy, Mexico,
where the central bank has a hands-off approach to its currency.

Latin American FX prices from Reuters at 2004 GMT:

Currencies daily % year-to
change date %
Latest change
Brazil real 2.0367 0.11 -8.26

Mexico peso 13.3050 1.05 4.99

Argentina peso* 6.1400 -0.65 -22.96

Chile peso 490.5000 0.65 5.87

Peru sol 2.6230 0.23 2.82

* Argentine peso's rate between
brokerages