EMERGING MARKETS-Brazil real tumbles, Chilean peso supported by rate rise

       * Brazilian real heads for third straight weekly fall
    * Mexican peso sole gainer for the week
    * Colombian peso rises with oil prices

    By Shreyashi Sanyal
    May 6 (Reuters) - The Brazilian real slid more than 1% on
Friday, heading for its third weekly decline after prices of
iron fell on fears of slowing demand from China, while Chile's
peso found its footing after the country's central bank raised
interest rates.
    Overarching worries of a slowdown in China due to rapidly
rising COVID-19 cases amid the U.S. Federal Reserve's aggressive
tightening cycle have made emerging market currencies seem
unattractive to investors recently.
    Latin American currencies, which clocked record quarterly
gains in the beginning of the year, have now lost their shine as
the rally in commodity prices cools and economic worries rise.
    Brazil's real was last down at 5.08 to the
dollar as prices of one of its largest exports, iron ore,
tumbled more than 5% after China reinforced its tough COVID-19
response policy that has hit economic activity, prompting
traders to be more cautious.
    The real is set for a weekly decline of 2.4%, while the
MSCI's broader Latin American currencies index
fell 1.2% in the same period.
    Brazil's central bank's monetary policy committee (Copom)
increased the Selic interest rate by a full percentage point on
Wednesday, but flagged a smaller rise next month even as
inflation figures remain in double-digits.
    "The central bank's monetary plan is following the script to
address this stubborn inflation," said Alfredo Coutino, director
at Moody's Analytics.
    "Monetary restriction will subdue it but also impose a cost
on the economy's recovery."
    Chile's central bank raised the country's benchmark lending
rate to 8.25% on Thursday, above expectations, and the move
lifted the peso by 0.5%. The currency is still set for a
weekly decline of 0.6%.
    Mexico's peso rose 0.6% and was the only major Latin
American currency to clock gains of 1.5% for the week. Investors
geared up for Mexico's central bank, known as Banxico, to raise
rates by 50 basis points at next Thursday's meeting, reaching a
200-basis point hike through year-end.
    The Colombian peso strengthened 0.9% in tandem with
oil prices that rose on Friday amid supply concerns.
    Among other EM currencies, Turkey's lira weakened
0.5% to 14.95 against the dollar, touching its weakest level in
nearly two months, while the Russian rouble
pulled back from a more than two-year high against the euro on
the spectre of more sanctions against Moscow.

    Key Latin American stock indexes and currencies at 1444 GMT:

         Stock indexes                  Latest   Daily %
                                                 change
 MSCI Emerging Markets                  1031.18     -2.6
 MSCI LatAm                             2227.98    -1.22
 Brazil Bovespa                       104969.10    -0.32
 Mexico IPC                            50085.37    -0.88
 Chile IPSA                             4826.44    -0.56
 Argentina MerVal                      86135.69   -0.345
 Colombia COLCAP                        1577.57    -0.26

             Currencies                 Latest   Daily %
                                                 change
 Brazil real                             5.0993    -1.64
 Mexico peso                            20.1404     0.41
 Chile peso                               857.2     0.52
 Colombia peso                          4044.95     0.90
 Peru sol                                 3.807    -0.47
 Argentina peso (interbank)            116.3000    -0.12

 Argentina peso (parallel)                198.5     1.51



 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by David
Clarke)