EMERGING MARKETS-Latam FX struggle against buoyant dollar; Surging oil lifts Colombian peso

    * MSCI Latam FX index on track for worst day in five months
    * Oil prices lift Colombian peso
    * Colombia's new deficit forecast raises downgrade prospect

    By Susan Mathew
    March 5 (Reuters) - Latin American currencies cut some early
losses on Friday as the  dollar stayed at multi-month highs but
gave back gains made after upbeat U.S. jobs data, while surging
oil prices buoyed Colombia's peso despite rating downgrade risk.
    The Colombian peso slid as much as 0.7% before rising
0.5%, as crude prices hit 14-month highs after OPEC+ decided to
extend output cuts.
    Colombia's 2021 fiscal deficit forecast on Thursday came in
well above market expectations, with the finance ministry
changing its projection for the deficit to 8.6%, from a previous
deficit prediction of 7.6%.
    "The revision of the 2021 fiscal deficit increases the
importance of presenting an ambitious fiscal reform in the
short-term," said Credit Suisse analyst Juan Lorenzo Maldonado.
    "Without strong and actionable guidance in the short term,
Colombia may be unable to avoid a downgrade in its sovereign
debt ratings to below investment grade status by either Fitch or
S&P before the end of the year."
    MSCI's index of Latam currencies was down
1.5%, en route to post losses for a third straight week, as the
greenback stayed buoyant due to the Fed's inaction on rising
U.S. treasury yields.
    A rise in nominal and real U.S. yields over the past three
days saw emerging market hard-currency bonds come under selling
pressure. The premium demanded by investors to hold
hard-currency EM sovereign debt over safe-haven U.S. Treasuries
has risen by 7 points to 358 points since Wednesday.
    "If you have a global rise in yields, fixed income is
clearly not going to have a good year," said Viktor Szabo at
Aberdeen Standard Investments.
    The dollar spiked after the Labor Department said U.S.
nonfarm payrolls surged by 379,000 jobs last month, topping
expectations of an increase of 182,000 jobs, but subsequently
pared some gains.
    Risk currencies took a hit, with the real down 0.3%,
while Mexico's peso slipped as much as 1.4% and hit
four-month lows before making up some losses. 
    Data on Friday showed industrial production in Brazil rose
in January but at the slowest rate in nine months, offering
another indication that the wider economic recovery is losing
    As Wall stocks indexes jumped after the payrolls data, Latam
followed suit, with Brazil's Bovespa up 1.5%, putting it
on track for a weekly gain of nearly 4% - the best week in a
    Chile's IPSA rose for a fourth session in five,
also looking to post its best week since Feb.5. 
    Key Latin American stock indexes and currencies at 1436 GMT:
  Stock indexes           Latest   Daily %
 MSCI Emerging Markets    1339.13    -0.54
 MSCI LatAm               2249.38    -0.86
 Brazil Bovespa         114345.09     1.47
 Mexico IPC                     -        -
 Chile IPSA               4746.50     0.98
 Argentina MerVal        48243.39     0.91
 Colombia COLCAP          1344.34     0.54
      Currencies          Latest   Daily %
 Brazil real               5.6759    -0.28
 Mexico peso              21.2208    -0.48
 Chile peso                 731.1     0.07
 Colombia peso            3623.63     0.54
 Peru sol                  3.6867    -0.14
 Argentina peso           90.3600    -0.07
 (Reporting by Susan Mathew in Bengaluru and Karin Strohecker in
London; Editing by Dan Grebler)