* Investors rush toward dollar safety * Mexican peso hits near 1-month low * Chilean peso tracks copper declines (Adds comment, details; updates prices) By Medha Singh Dec 21 (Reuters) - Latin American assets were hit on Monday as investors preferred the safety of the dollar after the UK imposed tough restrictions to fight a highly infectious new coronavirus strain. The Brazilian real dropped about 0.3%. The Mexican and Colombian pesos eased in tandem with oil prices, while weakness in the copper market undercut the Chilean peso. Global markets were roiled after the discovery of the new strain, just months before vaccines are expected to be widely available, sowed new panic and prompted several nations to shut their borders to Britain. "The news headlines today in Europe were not good at all, but gyrations in financial markets have been exacerbated by poor liquidity," said Stephen Gallo, strategist at BMO Capital Markets. "The more important feature of today's FX and equity market fluctuations is that they occurred after a long period of rising risk tolerance." Fears about the virus more than offset optimism as U.S. congressional leaders finally agreed on a $900 billion COVID-19 relief package. Hopes of fresh U.S. stimulus, as well as signs of progress in COVID-19 vaccinations, had supported the region's markets in the past weeks. MSCI's index of Latin American currencies has recovered about 11% since the U.S. presidential election on Nov. 3. But it is still headed for its steepest annual percentage fall since 2015 as the coronavirus pandemic exacerbates the region's economic pain. The Argentine peso deteriorated at a historic low of 83.15 per dollar as the country's talks with the International Monetary Fund (IMF) to extend a loan facilities program adding to jitters. Stocks in Buenos Aires shed 1.2% while sovereign bonds on Argentina's over-the-counter market fell 1% on an average. A basket of Latin American stocks dropped 1.3%, with indexes in Sao Paulo, Bogota and Mexico City leading declines. Key Latin American stock indexes and currencies: Stock indexes daily % change Latest MSCI Emerging Markets 1257.44 -0.86 MSCI LatAm 2428.55 -1.53 Brazil Bovespa 116757.21 -1.07 Mexico IPC 43336.47 -1.22 Chile IPSA 4163.13 -1.13 Argentina MerVal 50342.09 -3.83 Colombia COLCAP 1388.48 -2.66 Currencies daily % change Latest Brazil real 5.1263 -0.85 Mexico peso 19.9547 -0.10 Chile peso 725.9 -0.10 Colombia peso 3429.69 -0.36 Peru sol 3.6048 -0.27 Argentina peso (interbank) 83.1400 -0.36 (Reporting by Medha Singh and Shashank Nayar in Bengaluru; Editing by Alexander Smith and Dan Grebler)
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