EMERGING MARKETS-Currencies crumble as dollar soars; Stocks track Wall Street's slump

    By Susan Mathew
    Sept 8 (Reuters) - Emerging market currencies fell sharply
on Tuesday, with Brazil's real dropping almost 2%, as economic
and trade uncertainty and weakness in the dollar's main European
peers boosted the greenback's safe-haven appeal. 
    Amid concerns that a recovery in oil demand could weaken as
coronavirus infections flare up around the world, crude prices
tanked, further pressuring petro-currencies such as Mexican
 and Colombian pesos, which fell 0.4% and 1%
respectively.
    In a move that could threaten its investment rating, Mexico,
 late on Monday, raised a non-binding limit for gross debt to
70% of GDP, almost 20 percentage points above last year's level,
for the remaining four years of the term of its fiscally
conservative president.
    Meanwhile, the Mexican government's 2021 spending blueprint
will likely forecast revenue similar to this year's level, or
6.1 trillion pesos ($282 billion), a senior lawmaker said on
Monday.
    The dollar soared as the euro fell ahead of European
Central Bank meeting, while Brexit uncertainty knocked the pound
. 
    Worries about a tough economic rebound from the coronavirus
pandemic and simmering U.S.-China tensions after President
Donald Trump again raised the idea of decoupling the U.S. and
Chinese economies also sent investors to the safety of the
greenback.
   "Risk appetite remains weak as U.S.-China geopolitical
tensions flared up again overnight. With the U.S. election only
weeks away, we expect more of this to come," said Ned Rumpeltin,
European head of FX strategy at TD Securities. 
    "Correlations between risky assets and the dollar have
started to rise sharply again. In line with this, we are seeing
a further bout of dollar strength against most G10 and major EM
currencies."
    The Argentine peso slipped to new lows, but
global ratings agency S&P upgraded Argentina's long-term
sovereign credit rating on Monday, pulling it out of default
territory after the government successfully restructured over
$100 billion in sovereign debt.
    Coming back from a long weekend, Brazil's real was
last down 1.1%, while Chile's peso dipped 0.1%. 
    Elsewhere, South Africa's rand fell as much as 1.5%
after the recession-hit economy's second quarter GDP fell more
than expected - contracting by a record 51%, as a strict
coronavirus-induced lockdown stalled economic activity.
  
    Emerging markets stocks slid to their lowest in
more than two weeks as Wall Street slumped on a tech rout. 
    Main stocks indexes in Brazil and Mexico slid
more than 1%, while Colombian shares were set for the
biggest one-day drop in more than six weeks. 
         
    Key Latin American stock indexes and currencies at 1430 GMT:
  Stock indexes           Latest   Daily %
                                   change
 MSCI Emerging Markets    1088.59    -0.55
                                   
 MSCI LatAm               1966.75    -2.27
                                   
 Brazil Bovespa         100212.40    -1.02
                                   
 Mexico IPC              36080.66    -1.52
                                   
 Chile IPSA               3830.74    -0.61
                                   
 Argentina MerVal        44627.32   -2.328
                                   
 Colombia COLCAP          1232.46    -0.85
                                   
                                          
      Currencies          Latest   Daily %
                                   change
 Brazil real               5.3644    -1.09
                                   
 Mexico peso              21.7150    -0.44
                                   
 Chile peso                 774.9    -0.05
                                   
 Colombia peso            3752.25    -1.13
                                   
 Peru sol                  3.5488    -0.37
                                   
 Argentina peso           74.7000    -0.07
 (interbank)                       
                                   
 

 (Reporting by Susan Mathew in Bengaluru;
Editing by Alistair Bell)
  

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