(Updates prices) By Susan Mathew Jan 7 (Reuters) - Latin American stocks weakened on Tuesday because of lingering uncertainty around a standoff between the United States and Iran, while Chile's peso outperformed following a sharp sell-off in the previous session. Regional stock indices fell between 0.2% and 0.9%. Brazil stocks posted their fifth losing session in six. An index of global stocks traded flat with the Dow Jones index and the S&P 500 declining. The killing of a top Iranian general by the United States on Friday has made investors cautious as they wait to see how this latest dent in Washington-Tehran relations would play out as Iran vowed retaliation. "Local assets are being driven by external drivers, specifically the uptick in geopolitical risk and a stronger dollar," said Gustavo Rangel, chief economist, LATAM at ING New York. The dollar gained momentum as a rally in the Japanese yen and the Swiss franc - safe havens that have been favored since the rise in U.S.-Iran tensions - faded, while better-than-expected U.S. non-manufacturing sector and factory orders data provided an additional boost. Brazil's real and Mexico's peso traded flat, while Colombia's peso, sensitive to oil prices on account of being an exporter, fell half a percent for its biggest one-day fall in six weeks, as crude prices slipped. The Chilean peso, meanwhile, firmed 0.4% after two days of heavy losses. The currency lost almost 3% thanks in part to a fall in copper prices on Monday and as the central bank suspended intervention into the foreign exchange market this week. Chile's central bank had set up foreign currency interventions that were to last until May 2020 after the peso hit an all-time low in November following violent protests over inequality. Copper prices also tend to have significant sway on the peso as the base metal is Chile's largest export. On Tuesday, the state copper agency said output slumped at state miner Codelco and BHP's sprawling Escondida mine in November amid riots. Copper prices on the London's Metals Exchange closed higher. Chile's central bank said export revenue crept up in December, despite a fall in the value of copper shipments. The head of Chile's mining trade union on Tuesday said copper price is unlikely to rebound in 2020 even if trade tensions between the United States and China subside. Santiago's IPSA stock index rose 0.6% to its highest in more than two months. Latin American stock indexes and currencies at 1931 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1116.59 0.36 MSCI LatAm 2929.11 -0.65 Brazil Bovespa 116696.55 -0.16 Mexico IPC 44106.05 -0.87 Chile IPSA 4913.52 0.6 Argentina MerVal 41140.16 -0.795 Colombia COLCAP 1665.05 -0.68 Currencies Latest Daily % change Brazil real 4.0610 0.06 Mexico peso 18.8700 -0.17 Chile peso 768.8 0.48 Colombia peso 3261 -0.51 Peru sol 3.321 0.09 Argentine peso 59.730 -0.16 (Reporting by Susan Mathew in Bengaluru; editing by Grant McCool)
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