* Mexican central bank meeting eyed for Thursday * Peruvian sol recovers from 18-year low * Brazil's real still set for strong recovery -analyst (New throughout, updates prices, market activity and comments) By Ambar Warrick and Shreyashi Sanyal Nov 11 (Reuters) - Brazil's real dipped on Wednesday after retail sales came in weaker than expected, while most other Latin American currencies retreated as investors focused on prospects for a COVID-19 vaccine. The real fell as much as 0.6% even though data showed September retail sales rose to a record high, up for the fifth straight month. Still, the increase was the smallest in months and only around half of what economists expected, indicating stress from the pandemic on Latin America's largest economy. Analysts did say Brazil's economic fundamentals were far stronger than most other countries in emerging markets, and a post-pandemic recovery for the real was due. "Given that the real is very cheap at current levels, we do not think that a continued sell-off in the real at the rate witnessed since the onset of the crisis is likely in the long-term," said Matthew Ryan, senior market analyst at financial services provider Ebury. "We are instead continuing to pencil in a recovery for the currency against the dollar through to the end of 2021," he said. Ryan cited Brazil's strong foreign exchange reserves as a reason to buy the real, along with low external debt and a manageable current account deficit. While optimism over a potential vaccine spurred a rally in emerging markets early this week, a continued rise in global coronavirus cases and signs of the pandemic's economic fallout saw markets retracing their steps. The U.S. dollar rose on safe-haven demand. Mexico's peso fell 0.8% after industrial output was flat in September - a sign that a fledgling recovery may be stalling. Investors also awaited a policy decision from the Mexican central bank, which was expected to cut its benchmark interest rate on Thursday. "This week's meeting is a tough call and we certainly cannot rule out a 25bp cut, indeed, MXN price action over the past week arguably supports a decision to cut rates now rather than waiting," said Christian Lawrence, senior cross-asset strategist at Rabobank. Losses in Chile's peso were limited by the prices of copper, the country's top export, holding at a near 29-month peak. Colombia's peso was supported by strength in the oil market. Peru's sol recovered slightly from an 18-year low after Manuel Merino was sworn in as interim President of Peru on Tuesday, following President Martin Vizcarra's ouster by Congress a day earlier. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1178.00 -0.16 MSCI LatAm 2108.57 -0.63 Brazil Bovespa 104899.47 -0.16 Mexico IPC 40779.90 0.93 Chile IPSA 3973.58 -0.1 Argentina MerVal 51766.97 -0.1 Colombia COLCAP 1221.50 0.67 Currencies Latest Daily % change Brazil real 5.4133 -0.44 Mexico peso 20.5189 -1.00 Chile peso 754.4 0.17 Colombia peso 3639.24 -0.32 Peru sol 3.6218 0.02 Argentina peso (interbank) 79.4800 -0.05 Argentina peso (parallel) 158 -5.70 (Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru; editing by Emelia Sithole-Matarise and David Gregorio)
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