By Shreyashi Sanyal
    Aug 10 (Reuters) - The Brazilian real bounced higher on
Monday after two consecutive sessions of declines as data showed
signs of improvement in China's factory activity, helping to
ease worries around Sino-U.S. ties. 
    The real strengthened 0.7% against the dollar,
rebounding from recent weakness following the Brazilian central
bank's move to cut its benchmark lending rate to an all-time low
last week. 
    Market participants are hoping for a pick-up in Latam
currencies in the second half of the year on higher commodity
prices. 
    Surging COVID-19 cases in the region and U.S.-China tensions
have made investors cautious. China is one of the biggest
importers of agricultural commodities and metals from Latin
America.
    Mexico's peso traded in a tight range as investors
braced for the country's central bank, known as Banxico, to cut
its key interest rate on Thursday. 
    A Reuters poll showed Banxico will cut the rate to the
lowest level in four years despite a gradual uptick in inflation
 to help offset the economic fallout of the pandemic.

    "Regardless of the size of the cut delivered, all eyes will
be on the statement for fresh insight on how the Board is
balancing sticky inflation against a deepening contraction in
economic activity," Scotiabank analysts wrote in a client note. 
    The Argentine peso edged lower. A central bank
survey on Friday predicted a 12.5% contraction ​​in 2020.

    Argentina will also start talks with the International
Monetary Fund in the coming weeks aimed at a new program to
replace a defunct $57 billion standby lending deal from two
years ago.
    The Peruvian central bank is also set to release its policy
update later in the week, with markets expecting lending rates
to be held steady. Policymakers, in their previous meeting, said
they could not rule out further rate cuts from the current
historic minimum.    
    Most other currencies in the region were subdued against a
firmer dollar, with the Colombian peso declining 0.5%.
Chilean stocks were among top gains in early hours of
trading as shares of copper miners advanced. 
    
    Key Latin American stock indexes and currencies at 1413 GMT:
 
 Stock                              Latest     Daily % change
   indexes                                     
 MSCI Emerging Markets              1087.73    -0.15
                                               
 MSCI LatAm                         2026.27    1
                                               
 Brazil Bovespa                     103015.05  0.23
 Mexico IPC                         38286.75   0.74
 Chile IPSA                         4022.09    0.83
 Argentina MerVal                   0.00       0
 Colombia COLCAP                    1145.36    0.28
                                               
 Currencies                         Latest     Daily % change
 Brazil real                        5.3751     0.67
 Mexico peso                        22.4478    -0.40
 Chile peso                         791.8      -0.54
 Colombia peso                      3763.98    -0.63
                                               
 Peru sol                           3.5518     0.00
 Argentina peso (interbank)         72.9400    -0.23
                                               
 Argentina peso (parallel)          129        2.33
                                               
 

 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Dan
Grebler)