* U.S., China sign Phase 1 trade deal on Wednesday * Investors cautious about lasting truce * Brazil's real firms on pickup in economic activity * Mexican peso, Argentine peso, Peruvian sol muted By Sagarika Jaisinghani and Ambar Warrick Jan 16 (Reuters) - Latin American assets rose on Thursday as China pledged to boost purchases of U.S. goods and services in the two countries' Phase 1 trade deal, while stronger-than-expected economic activity in Brazil lifted the real. A basket of Latin American stocks rose about 0.4%, while its counterpart tracking currencies added 0.1%. Both indexes had declined on Wednesday as weak economic data from Brazil, the region's biggest economy, overshadowed broader optimism about the trade truce between Washington and Beijing. On Thursday, the Brazilian real was up about 0.3% as new figures showed economic activity in November rose for the fourth month in a row. Investor nerves were also soothed by comments from China's Vice Premier Liu He that other suppliers of agricultural commodities would not be impacted by the Sino-U.S. trade deal. China is Brazil's biggest market for soybeans. "(The real) has strengthened a bit today, but that came on the back of a lot of weakness yesterday," said William Jackson, chief emerging markets economist at Capital Economics in London. Jackson added that persistently weak economic indicators in Brazil set the stage for another interest rate cut at the next central bank meeting in early February, after four consecutive reductions in 2019. All eyes are now on the second phase of negotiations between Washington and Beijing that will seek to resolve structural economic issues that led to the tariff dispute in 2018. Analysts said China's target of $200 billion in additional purchases, covering energy, farm and manufacturing products, also appears daunting. "It's a bit of a warning sign, where we're not escalating anymore, but things aren't exactly improving," said Win Thin, head of emerging market currency strategy at Brown Brothers Harriman. "It's positive for EMs, but I think we've gotten a lot of big moves in EM already and further gains will be tough going forward," he said. The Chilean peso rose 0.4% versus the dollar, a day after President Sebastian Pinera said he would send a bill to Congress this week to reform the country's pension system, which has been the focus of months of demonstrations. The Mexican peso and the Peruvian sol were trading flat, tracking the mood in global currency markets. Argentina's peso was also muted, as data showed consumer prices rose 53.8% in 2019, marking the biggest increase in 28 years and posing a major challenge for the new president as he tackles soaring inflation in Latin America's No. 3 economy. Key Latin American stock indexes and currencies at 1428 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1140.77 0.25 MSCI LatAm 2880.59 0.35 Brazil Bovespa 116910.96 0.43 Mexico IPC - - Chile SPIPSA - - Argentina MerVal 41675.78 1.042 Colombia Colcap - - Currencies Latest Daily % change Brazil real 4.1700 0.33 Mexico peso 18.7910 -0.04 Chile peso 771.8 0.44 Colombia peso 3302.93 -0.21 Peru sol 3.3208 0.07 Argentina peso (interbank) 59.9600 - (Reporting by Sagarika Jaisinghani in Bengaluru; editing by Jonathan Oatis)
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