Brazil's real leads Latam gains as commodities cheer Chinese demand

  • Peru's sol dips on Las Bambas concerns
  • Colombia's peso down as inflation spike looms

Feb 7 (Reuters) - Brazil's real led gains among Latin American currencies on Monday as commodity prices rose on the prospect of more demand in major importer China, while focus turned to a series of central bank meetings this week.

The real rose 1% after falling for two consecutive sessions, tracking strong gains in metal prices after a call by the world's top metal consumer, China, for faster infrastructure construction pointed toward stronger demand.

MSCI's index of Latin American currencies (.MILA00000CUS) and stocks (.MILA00000PUS) each gained 1.2%.

Chile's peso rose 0.5%, tracking stronger base metal prices. The country's copper export revenues were $3.870 billion in January, while a separate reading showed a trade surplus of $799 million in the first month of the year.

The dollar index , which measures the greenback against a basket of currencies, steadied on Monday after last week's payrolls report showed the U.S. economy created far more jobs than initially expected, creating room for more aggressive tightening by the Federal Reserve.

Higher interest rates in the United States may lead to capital outflows and currency depreciation in emerging markets.

Analysts at Moody's expect the Fed to increase interest rates three times this year, which is likely to strengthen the dollar.

"As U.S. interest rates rise, capital flowing into emerging economies is likely to slow, weighing on economic growth in those countries and weakening their currencies," Lev Dorf, an analyst at Moody's, said in a note to clients.

However, currencies of emerging market central banks which have already embarked on rate hikes are still in a better position to fend off risks from rising rates in the developed world.

Investors are now awaiting monetary policy decisions in several emerging economies this week, with the Russian, Polish, and Mexican central bank meetings due later.

Colombia's peso slipped 0.3% in the face of rising inflation risks. The government plans to control inflation, which was more than double the target rate in the 12 months to January, by reducing costs for farmers and some tariffs, the finance ministry said.

Peru's sol slipped 0.2%, as concerns about the Chinese-owned Las Bambas copper mine resurfaced after MMG Ltd (1208.HK) said on Monday that production may stop by Feb. 20 following a blockade by a local community. read more

Mexican markets were closed for a holiday.

Key Latin American stock indexes and currencies:

Reporting by Shashank Nayar in Bengaluru; editing by Jonathan Oatis and Susan Fenton

Our Standards: The Thomson Reuters Trust Principles.