Chilean markets hammered after leftist Boric's election win

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  • Chilean peso slides to 2020 lows
  • Omicron fears sap global mood
  • Mexican peso supported by central bank's hawkish move

Dec 20 (Reuters) - The Chilean peso dived to 2020 lows and stock markets slumped on Monday after leftist Gabriel Boric's presidential election victory, while risks around rising Omicron cases dampened the global mood towards riskier assets.

The peso , among the weakest performing emerging market currencies this year, fell well above 3% to 875.40 per dollar - a level not seen since the height of the coronavirus pandemic selloff in 2020. read more

The currency of the world's top copper producer was set to record its worst single day fall in a decade and has shed roughly 18% versus the dollar this year, while the MSCI's index of Latin American currencies (.MILA00000CUS) is down just 5%.

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The overall mood across emerging markets was somber as investors feared that the fast-spreading Omicron variant of the coronavirus and hawkish central policies will hamper global economic growth.

Chile's equity benchmark S&P IPSA CLP index (.SPIPSA) slumped nearly 6% to a two-month low and was set for its worst day in seven months, while lithium miner SQM (SQMA.SN), which has been in the crosshairs over its environmental impact, fell 1%.

Boric, a 35-year-old former student protest leader who has pledged to raise taxes, scrap private pensions and oppose mines that "destroy" the environment, defeated conservative Jose Antonio Kast in Sunday's runoff by a margin of about 56% to 44%.

"We doubt Chile will go the way of Venezuela (or even Argentina) in terms of its economic model. We would view this spike as a medium-term selling opportunity with a target for USDCLP to revert back down to somewhere in the low 800s a year from now," said Greg Anderson, global head of FX strategy at BMO.

Most other Latin American currencies including the Colombian peso , Brazil's real , Argentine peso and Peruvian sol also came under pressure, as soaring cases of the Omicron variant drove the Netherlands into a lockdown and other countries to assess similar moves.

However, the Mexican peso remained supported near 20.7 per dollar after the country's central bank last week surprised investors with a 50-basis-point interest rate hike aimed at reining in surging inflation. read more

MMG Ltd's (1208.HK) Las Bambas copper mine does not plan to initiate legal action against Peru "for the time being" over a nearly month-long road blockade. Peru is the world's no. 2 copper producer and Las Bambas accounts for 2% of the world's copper supply. read more

The Turkish lira extended declines to fall another 10% after hitting multiple record lows following President Tayyip Erdogan's fresh pledge to keep interest rates low. read more

Key Latin American stock indexes and currencies:

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Reporting by Sruthi Shankar and Shashank Nayar in Bengaluru Editing by Paul Simao and Alistair Bell

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