Chilean peso rallies off record lows, Mexican peso slumps 1%
* Brazil's real reverses session gains
* Rising copper prices lift Chile's peso
* Colombian peso tracks oil prices higher
* Latam stocks lose steam as Wall Street slips (Updates prices)
By Susan Mathew
June 28 (Reuters) - The Chilean peso rallied 1.1% on Tuesday, away from record lows as copper prices rose on easing COVID-19 restrictions in China, while the currencies of Mexico and Brazil fell against a stronger dollar.
Chile's peso CLP= , which has been sliding further into record low territory for the past few sessions, rose as much as 2.5% but pared gains as the dollar rally gained steam.
Copper prices jumped after top consumer China halved its COVID-19 quarantine period for overseas visitors, and promised more measures to cope with economic challenges.
Chile is the world's top producer of the red metal. Its currency recently has been hit by worries about demand for copper as well as protests at its biggest mining company, Codelco.
Chile is seen following up this month's 75 basis points interest rate hike with another 50 bps rise next month to 9.5% in its battle against inflation, a central bank poll of traders showed on Tuesday.
The Mexican peso MXN= slumped 1%, on track for its worst session in two weeks, while Brazil's real reversed initial gains, last down 0.6%.
Data on Tuesday showed Brazil's federal public debt rose 2.01% in May from April, with the average cost of domestic debt issuance jumping to a five-year high as inflation remains high.
Brazil's economy minister on Tuesday cut the economic growth forecast to 2% from 3.5% and increased a cash transfer program.
This could raise more questions about government spending and cause volatility, said Jerson Zanlorenzi Jr, head of the equities and derivatives trading desk at BTG Pactual Digital.
Crude exporter Colombia's peso COP= jumped 0.9%. Oil prices rose over 2% as major producers Saudi Arabia and the United Arab Emirates looked unlikely to be able to boost output significantly.
As Wall Street stocks fell following weak U.S. consumer confidence figures, a rally in Latam bourses lost momentum. Main indexes in Brazil .BVSP and Chile .SPIPSA turned to losses, while Mexico's IPC index .MXX almost halved session gains.
MSCI's broader index of emerging market currencies .MSCIEF traded flat after rising up to 0.3% earlier in the day on optimism about China's economic growth.
In Argentina, the gap between the official currency exchange rate ARS= and the informal peso rate has widened to around 100% recently, while sovereign bonds have tumbled back into distressed territory on increased default risk as the country struggles with economic growth.
Key Latin American stock indexes and currencies at 1852 GMT: Stock indexes
change MSCI Emerging Markets
change Brazil real
Colombia peso COP=
0.91 Peru sol
-0.13 (interbank) ARS=RASL
Reporting by Susan Mathew in Bengaluru; editing by Mark Heinrich and Richard Chang
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