Brazil's real underperforms on inflation fears

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Dec 10 (Reuters) - Brazil's real slipped on Friday as inflation slowed but remained around a six-year high, while most other Latin American currencies firmed against a weakening U.S. dollar.

The real , dropped 0.8% as the Brazilian data underscored the central bank's tough task controlling rising costs in the region's largest economy.

"Disinflation of the economy and anchoring long-term inflation expectations are likely to take time and will require a very restrictive monetary policy," Credit Suisse analysts wrote in a note.

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"We maintain our expectation that the central bank will raise the Selic interest rate ... to 12.25% by May 2022."

Brazil's central bank has hiked the rate to 9.25% from 2% at the beginning of the year, and has signaled more rises to come. Analysts have warned that the aggressive pace of hikes could cripple economic growth.

Moody's on Friday warned that Brazil's second consecutive quarterly GDP contraction is credit negative, despite ongoing fiscal consolidation.

Sao Paulo stocks (.BVSP) jumped 1.2%. Wood panel manufacturer Dexco SA (DXCO3.SA) rose 7% after its board approved an early payout of dividends to shareholders, while Brazilian stock exchange B3 (B3SA3.SA) jumped on approving a share buyback.

The dollar lost some ground after U.S. consumer prices increased roughly in line with expectations in November as investors, who had been bracing for much higher inflation, bet that the actual number would not change the pace of interest rate hikes. read more

The currencies of oil exporting countries Mexico and Colombia gained 0.3% and 0.1%, respectively, and were set to gain for the second consecutive week as they tracked stronger oil prices.

The currency of the world's top copper exporter, Chile , lifted from a more than seven-month low, but underperformed regional peers on the week. Demand uncertainties in top metals consumer China have weighed on copper prices in recent weeks.

Chile's central bank is widely expected to hike its benchmark interest rate next week to prevent the economy from overheating during a post-COVID bounce.

In Argentina, the International Monetary Fund and the government are both "fully committed" to working towards a new program, the lender said on Friday, adding more talks are needed after recent meetings between officials from the two sides in Washington. read more

Key Latin American stock indexes and currencies:

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Reporting by Shashank Nayar in Bengaluru Editing by Mark Potter and Andrew Heavens

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