* Mexican peso at four-month low * Brazil's real pares initial gains * Latam stocks fare better than FX (Adds details, updates prices) By Susan Mathew and Ambar Warrick March 4 (Reuters) - Colombia's peso led gains across Latin American currencies on Thursday as oil prices scaled one-year highs, while most other units fell as U.S. Treasury yields rose after the Federal Reserve reiterated an easy monetary policy. The Colombian currency was set for its biggest daily gains in a month, as it recovered from lows last seen in November. Oil prices trended higher ahead of an OPEC+ meeting that is expected to extend supply cuts. Most other Latam currencies were muted as U.S. Treasury yields rose, dampening appetite for risk-driven assets. Fed Chair Jerome Powell reiterated his pledge to keep policy loose and tolerate spikes in inflation. "The higher-beta (EM) currencies could do relatively well — even in an environment of rising rates — as long as global recovery expectations remained firm," analysts at TD securities said. Global inflation expectations have risen recently as investors expect steady COVID-19 vaccine rollouts to eventually spur a return to economic normalcy. But most Latam currencies face a tougher road to recovery than their emerging market peers, due to sluggish vaccination drives and concerns over populist policies in major economies. Brazil's real pared initial gains to trade lower, with investors showing a mixed reaction to the Senate's passing of a constitutional amendment letting the government extend emergency pandemic aid without exceeding spending caps. Sentiment towards Brazilian markets has been hit since the firing of Petrobras' chief executive last week, which raised concerns of the government adopting populist policies. "The reality is that the Petrobras incident has reinforced market concerns about the Bolsonaro administration's lack of commitment to reduce state intervention in the economy, and it will take tangible success on the reform front for the government to regain even part of the market confidence it lost," analysts at TS Lombard wrote in a note. Mexico's peso, which fell 0.7% to a four-month low, has also faced pressure from concerns over government intervention in local energy markets. Latam stocks fared better than currencies, given that they stand to benefit the most from loose monetary policy. Brazilian stocks rebounded from more than three-month lows. Chilean lithium producer SQM fell despite marking record lithium sales in the fourth quarter, as floundering prices for lithium weighed on the company´s profits. Chilean President Sebastian Pinera announced a new plan to overhaul the country´s heavily criticized pension plan - a principal demand of protesters during widespread riots in 2019 that had hammered the peso. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1340.07 -2.75 MSCI LatAm 2230.61 0.54 Brazil Bovespa 112576.02 1.25 Mexico IPC 46424.85 0.1 Chile IPSA 4715.06 -1.51 Argentina MerVal 47785.39 0.973 Colombia COLCAP 1339.81 -0.55 Currencies Latest Daily % change Brazil real 5.6516 0.17 Mexico peso 21.0810 -0.69 Chile peso 729.7 -0.37 Colombia peso 3643.15 0.99 Peru sol 3.6817 -0.24 Argentina peso 90.2900 -0.07 (interbank) (Reporting by Susan Mathew in Bengaluru; editing by Barbara Lewis and David Evans)
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