* Do not expect Brazil real to recover until next year -
analyst
    * Bovespa up after retail sales surge back to pre-crisis
levels 
    * Mexican central bank policy decision awaited on Thursday
    * Colombia peso slips as country tops 400,000 coronavirus
cases

    By Shreyashi Sanyal
    Aug 12 (Reuters) - Most Latin American currencies traded in
tight ranges on Wednesday, as investors questioned the
likelihood of fresh stimulus in the United States, while the
Brazilian real fell on growing doubts over its pace of recovery
this year. 
    The real fell 0.7% and has mostly remained weak since
the Brazilian central bank cut interest rates one week ago.  
    Investors have cheered signs of a recent pick up in economic
activity in Latin America's biggest economy but are now cautious
on the real amid surging COVID-19 cases, a dovish central bank
and worsening ties between the United States and China.   
    "The Banco Central do Brasil (BCB) has shown itself to be
more dovish and has introduced forward guidance. Not only does
this leave the back door open for further monetary easing, it
also dampens expectations of rate hikes in the coming year,"
said FX analysts at Commerzbank. 
    "We do not expect the BRL to recover until next year, when
the crisis has subsided and the markets price out the corona
risk."
    Even as Brazil amasses a record debt that has evoked
memories of crises past in South America's largest economy, some
economists say rock-bottom interest rates and low foreign debt
mean the government can continue to spend its way out of
recession.
    Most currencies in the region made sideways moves, with
investors focusing on offshore events after U.S. Treasury
Secretary Steven Mnuchin said the White House and top Democrats
may not be able to reach a deal on coronavirus aid, in a fifth
day without talks on the stalemate.
    Coronavirus cases continued to surge in South America, with
Colombia topping 400,000 confirmed coronavirus cases on Tuesday,
as deaths climb toward 13,500 and intensive care units in the
capital Bogota remain near capacity. The Colombian peso
fell 0.3% against the dollar. 
    Mexico's peso was subdued with investors awaiting a
central bank policy decision on Thursday. Markets are pricing in
a 50 basis point cut in its key lending rate.  
    Among stocks indexes, Brazil's Bovespa rose 0.8%
after data showed retail sales ended the first half of the year
on a strong footing, surging back to pre-crisis levels as the
easing of lockdown measures continued across the country.

    Shares in Brazilian software firm Linx SA fell
4%, a day after card processor StoneCo said it would buy Linx in
a $1.12 billion deal that will transform it into an integrated
software and payments provider.
    Key Latin American stock indexes and currencies at 1426 GMT:
    
        Stock indexes                   Latest      Daily %
                                                    change
 MSCI Emerging Markets                     1092.09     0.08
 MSCI LatAm                                2004.38    -0.27
 Brazil Bovespa                          102321.69     0.14
 Mexico IPC                               38818.04      0.3
 Chile IPSA                                4031.30     0.78
 Argentina MerVal                         50312.54   -1.345
 Colombia COLCAP                           1138.04     0.32
                                                           
            Currencies                  Latest      Daily %
                                                    change
 Brazil real                                5.4630    -0.90
 Mexico peso                               22.3737     0.05
 Chile peso                                  793.8    -0.16
 Colombia peso                             3746.74    -0.40
 Peru sol                                   3.5618    -0.06
 Argentina peso (interbank)                73.0400    -0.05
                                                    
 Argentina peso (parallel)                     128     2.34
                                                    
 

 (Reporting by Shreyashi Sanyal in Bengaluru; 
Editing by Bernadette Baum)