* FX nonplussed by dollar weakness * Chile's peso recovers slightly * Brazil's economy seen shrinking in 2020- Analyst (Adds comment, details on Mexico and Chile, updates prices) By Ambar Warrick and Susan Mathew March 23 (Reuters) - Mexico's peso slipped to new lows on Monday, while most Latin American assets retreated as fears of a deep global recession due to the coronavirus pandemic prompted an exodus from emerging markets. Weakness in the dollar, following additional stimulus measures from the U.S. Federal Reserve, did little to stem the rout in regional currencies. The Mexican peso slipped about 2.8%, touching a record low of 25.2459 to the dollar, while Brazil's real shed more than 1%. As the economic ructions from the outbreak become increasingly apparent, emerging markets face increased selling as risk appetite declines. MSCI's index of Latin American stocks plunged 7% to levels last seen in late-2004. Stocks in Brazil , the region's largest economy, slipped 6% as major banks sank in the face of a looming liquidity crunch. Brazil's central bank said on Monday it would extend loans backed by corporate bonds to banks between March 23 and April 30, in a move to add liquidity to the financial system. "The Brazilian economy relies strongly on domestic consumption – about 65% of GDP – which will be hit very hard by the outbreak," Wilson Ferrarezi, Brazil economist at TS Lombard wrote in a note, adding that the country's economy would likely shrink 1% in 2020. Mexican stocks fell 2.7%, taking little support from an emergency interest rate cut on Friday. Mexico's central bank announced a 50 basis point cut - its biggest in six years - in an out-of-cycle move, and pledged financial market support as part of more aggressive measures to cushion the economy from the coronavirus fallout. "We welcome the central bank's announcements, as we think they will foster more orderly trading conditions in the local fixed income market, as well as in the currency market," wrote Credit Suisse analysts Alonso Cervera and Alberto J. Rojas in a note. "We also think that given the projected sharp drop in economic activity, the bank will continue to lower the overnight rate by at least another 200 bps to 4.5%, in the next six months." Chilean stocks tumbled nearly 6%, while the peso strengthened slightly against the dollar, recovering from a near record-low. Financial markets in Colombia and Argentina were closed for local holidays. Key Latin American stock indexes and currencies at 1936 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 757.29 -5.72 MSCI LatAm 1373.30 -8.14 Brazil Bovespa 62519.69 -6.78 Mexico IPC 33366.98 -2.63 Chile IPSA 2896.91 -5.86 Currencies Latest Daily % change Brazil real 5.1240 -1.2 Mexico peso 25.1200 -2.78 Chile peso 860.5 0.30 Peru sol 3.5317 -0.11 (Reporting by Susan Mathew in Bengaluru; Editing by Alistair Bell and Richard Chang)
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