* MSCI's Latam stocks index down 22% for week * Brazil's real comes off record lows * Chile stocks fall despite fiscal measures (Adds details, updates prices) By Ambar Warrick and Susan Mathew March 20 (Reuters) - Latin American stocks marked their worst week since 2008 as the economic outlook for the region worsened in face of the coronavirus outbreak, while most currencies trended lower on Friday. Brazil stocks fell 2.4%, shedding earlier gains after Latin America's largest economy slashed its 2020 economic growth forecast to zero from 2.1% previously, due to the perceived hit from the outbreak. The country also declared a state of emergency over the virus. The MSCI's index of Latin American stocks was down roughly 22% for the week, its worst since 2008. Stocks in Mexico and Chile also retreated for the day. Week-long losses in currencies were somewhat curbed by a pause in the dollar's rally, after major central banks pledged dollar liquidity measures amid a mad rush to the greenback. The real rose about 1%, while the Mexican and Argentine pesos fell 0.6% each. The MSCI's index of Latin American currencies, while ticking up slightly for the day, was set for its worst week since late-2016. "In Brazil, its central bank appears well-prepared to deploy its ample intervention potential to ensure the liquidity of FX markets," Gustavo Rangel, chief economist, LATAM, at ING, wrote in a note. " Ultimately, much should depend on the ability of local economies to prevent the ongoing liquidity crunch... But not every country has the capacity to deploy resources effectively while ensuring that the necessary short-term fiscal weakening does not translate into permanent damage." A Reuters poll showed the global economy is already in recession, which bodes poorly for the risk appetite-driven assets in emerging markets. Developing world stocks and currencies found some short-lived relief after the U.S. Federal Reserve on Thursday opened currency swap lines with nine central banks, including some in emerging markets. Chile's government Thursday announced an $11.7 billion package of emergency measures aimed at saving jobs and protecting small businesses. The move came just hours after the International Monetary Fund said governments should take decisive action to limit the pandemic's impact. In Brazil, confirmed coronavirus cases more than doubled in two days, while a diplomatic spat over the virus' origins between President Jair Bolsonaro's son and the Chinese ambassador threatened relations with Brazil's top trading partner. Argentina's peso, which weakened about 1% for the week, has remained somewhat insulated to the market rout thanks to capital controls that have been in place since a bailout by the IMF in 2018. But the seeming out-performance masks rising tension in the currency stemming from a divergence in the black market and official spots rates. Key Latin American stock indexes and currencies at 1926 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 802.10 4.66 MSCI LatAm 1474.11 -1.37 Brazil Bovespa 66576.74 -2.57 Mexico IPC 34062.93 -3.08 Chile IPSA 3075.96 -0.18 Argentina MerVal 23776.78 4.945 Colombia COLCAP 916.57 1.87 Currencies Latest Daily % change Brazil real 5.0467 1.10 Mexico peso 24.2220 -0.82 Chile peso 863.1 0.01 Colombia peso 4118.75 -0.77 Peru sol 3.5278 0.74 Argentina peso 63.7000 -0.58 (interbank) (Reporting by Susan Mathew in Bengaluru; Editing by Alexander Smith and Tom Brown)
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