Mercados emergentes: alzas reales en Brasil del 1% respaldadas por Cenbank y garantías financieras

    * Mexican economy expands 5% in September
    * Brazil's real to weaken further, economist says
    * Vale drops on downbeat outlook
    * America Movil, Aeromexico drop after Q3 results

 (Updates prices)
    By Shashank Nayar and Susan Mathew
    Oct 20 (Reuters) - Brazil's real jumped 1% higher on
Wednesday amid central bank intervention and fiscal
reassurances, while Mexico's peso hit three-week highs after
data showed its economy continued to recover from a COVID-19
pandemic slump.
    After declining initially on political and fiscal worries,
Brazil's real rose as President Jair Bolsonaro
said a new welfare program that he approved would not breach the
government's spending limit, but failed to give details on how
that would be achieved.
    Attempts by the central bank to support the currency
hovering at six-month lows also helped. The bank sold all 10,000
forex swap contracts offered at an auction on Wednesday.
 
    The welfare announcement added to the evidence that there is
little appetite for the long-term fiscal squeeze needed to
stabilize Brazil's public finances, said William Jackson, chief
emerging market economist at Capital Economics.
    "Taken together with slower growth and higher interest
rates, we think that the public debt-to-GDP ratio is likely to
be on an upwards trajectory from next year. This feeds into our
view that government bond yields will climb higher and that the
real will weaken further from here," Jackson said.
    Mexico's peso gained 0.3% as its economy expanded by
5.0% in September compared with the same month last year, a
preliminary estimate from national statistics agency INEGI
showed.
    The heavily controlled Argentine peso was flat
against the dollar. The government froze prices of over a
thousand household goods until early 2022 in a bid to tamp down
inflation.
    "In our view, this policy is unlikely to curb inflation, and
if it has any effect, it will be in the very short term at the
cost of increasing medium-term risks when prices unfreeze,"
strategists at Citi said.
    The South American nation is battling to cool inflation that
is running at an annual rate of over 50%, sapping savings and
dragging on economic growth.
    Among stocks, a rally in Brazilian banks and energy
companies far-outweighed an 2.5% drop in miner Vale,
sending the Bovespa stocks index 0.8% higher. 
    Vale dropped after saying it was slowing down production of
low-margin iron ore in the fourth quarter by about 4 million
tonnes due to low prices, and could cut back output in 2022 if
prices did not rise.
    Mexican telecom firm America Movil and airline
operator Aeromexico lost 1.5% and 0.5%,
respectively, after weak third quarter earnings updates.

    
    Key Latin American stock indexes and currencies:
   Stock indexes           Latest    Daily %
                                     change
 MSCI Emerging Markets      1302.10     0.58
                                     
 MSCI LatAm                 2237.24     0.42
                                     
 Brazil Bovespa           111589.93     0.83
                                     
 Mexico IPC                52325.75    -0.15
                                     
 Chile IPSA                 4037.34     1.06
                                     
 Argentina MerVal          86691.20    2.827
                                     
 Colombia COLCAP            1413.00    -0.25
                                     
                                            
      Currencies           Latest    Daily %
                                     change
 Brazil real                 5.5402     0.98
                                     
 Mexico peso                20.1731     0.27
                                     
 Chile peso                     813    -0.32
                                     
 Colombia peso              3764.56    -0.01
                                     
 Peru sol                    3.9362    -0.02
                                     
 Argentina peso             99.3500    -0.04
 (interbank)                         
                                     
 
 (Reporting by Shashank Nayar in Bengaluru
Editing by Mark Potter and Will Dunham)