* Mexico confirms new coronavirus strain first seen in UK * Brazilian real hits lowest level in two months * Oil-exporter Colombia falls after crude prices slide By Shreyashi Sanyal Jan 11 (Reuters) - Mexico's peso slipped along with most other currencies in Latin America on Monday as the country confirmed it had detected the new variant of the coronavirus first seen in Britain, while the dollar touched its highest in over two weeks. The peso weakened 1.2% to hit a three-week low against the dollar after the confirmation of the especially contagious variant of the virus for the first time in Mexico, home to the pandemic's forth-highest death toll globally. Most currencies in the region weakened, with MSCI's index for Latin American currencies down 1.4% as rising Treasury yields boosted the dollar. "Shorting the dollar was the most recommended trade in currency markets heading into 2021. However, rising yields could now lead to a rethinking of this strategy," said Hussein Sayed, chief market strategist at FXTM. The Brazilian real slid 1.4%, touching its lowest since November. The focus now is on Brazil's mass inoculation campaign, with investors also dissatisfied by the pace of the government's reform agenda. "The risks to economic recovery reside in a stronger-than-expected impact of the unwinding of fiscal stimulus and a possible tightening of social mobility restrictions caused, for example, by a delay in the vaccination of the population," said Solange Srour, chief economist at Credit Suisse in Brazil. The outlook for Brazilian interest rates over the next two years rose to their highest in several months, a central bank survey of economists showed, even as exchange rate and inflation expectations held steady. Oil-exporter Colombia's currency fell 1.3% after crude prices dropped on renewed concerns about global fuel demand amid tough coronavirus lockdowns around the world. Chile's peso weakened 1% against the dollar as prices of its top export, copper, fell as surging coronavirus cases in top consumer China reinforced demand worries. MSCI's index of emerging market stocks hit another record high on Monday on a combination of post COVID-19 economic recovery hopes and massive global stimulus. Brazil's Bovespa index fell 1%, with state-controlled lender Banco do Brasil SA down 2% after announcing a restructuring aimed at saving up to 2.7 billion reais ($493 million) by 2025. Key Latin American stock indexes and currencies at 1415 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1352.75 -0.06 MSCI LatAm 2481.28 -2.24 Brazil Bovespa 123740.95 -1.07 Mexico IPC 0.00 0 Chile IPSA 4502.58 -1.26 Argentina MerVal 0.00 0 Colombia COLCAP 0.00 0 Currencies Latest Daily % change Brazil real 5.4912 -1.38 Mexico peso 20.2008 -0.96 Chile peso 718.5 -1.34 Colombia peso 3514.47 -1.37 Peru sol 3.6148 -0.25 Argentina peso (interbank) 85.3800 -0.29 Argentina peso (parallel) 157 3.18 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Kirsten Donovan)
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