EMERGING MARKETS-Colombian peso slips ahead of weekend election

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* Colombia election on Sunday sees leftist Petro in pole position * Brazil's Lula increases lead over Bolsonaro - poll (Updates prices, table; adds comment, details) By Bansari Mayur Kamdar and Anisha Sircar May 27 (Reuters) - The Colombian peso slipped ahead of the presidential election on Sunday which leftist contender Gustavo Petro is expected to win, while Latin American currencies headed for their second straight week of gains. Petro has consistently led opinion polls for the presidential vote against a center-right candidate seen as the natural successor to the incumbent leader, and an eccentric business magnate. "Colombia used to be among the countries where policy continuity was never in question, but the current list of frontrunners includes a rather interesting personality from the far left... Many observers argue that Petro’s victory is yet to be fully priced in by the market," said Natalia Gurushina, EM Fixed Income economist at VanEck. The Colombian peso reversed gains from earlier in the day to slip 0.3% against the dollar, and was up 1% on the week, underperforming regional peers despite stronger crude prices. "(The peso) has done a round trip in May," said Edward Al Hussainy, senior interest rate and currency analyst at Columbia Threadneedle. "Relative to where oil prices are today, the peso is very weak for a pretty oil-heavy currency," he said, adding that the gap suggests that a lot of political risk has already been baked into the peso. Colombian corporates remain well positioned to face the challenging political and operating environment engulfed in political uncertainty, according to a new Fitch Ratings report. The MSCI's index for Latin American currencies rose to its highest level in more than a month and extended gains for a second straight week, while stocks added 1.4%. In Brazil, a new survey by pollster Datafolha showed former President Luiz Inacio Lula da Silva has increased his polling lead over incumbent Jair Bolsonaro ahead of the October presidential election. The Brazilian real rose 0.8%, heading for a third straight week of gains. The Bovespa edged 0.3% higher. Miner Vale SA gained 1.5%, tracking a recovery in iron ore prices which were boosted by hopes of additional stimulus measures from China. Mexico's peso rose 0.8%, helped by weakness in the dollar, after minutes from the Federal Reserve's May meeting earlier this week calmed fears that the U.S. central bank could become more aggressive. Elsewhere, Russia's rouble extended losses against the dollar after plunging around 10% in the previous session as the central bank slashed interest rates and the prospect of easing capital controls as well as a possible sovereign default hammered the currency. Key Latin American stock indexes and currencies at 1928 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1043.64 2.02 MSCI LatAm 2486.31 1.37 Brazil Bovespa 112297.19 0.36 Mexico IPC 52463.23 0.61 Chile IPSA 5366.63 1.84 Argentina MerVal 93931.14 0.235 Colombia COLCAP 1522.26 0.9 Currencies Latest Daily % change Brazil real 4.7353 0.55 Mexico peso 19.5890 0.88 Chile peso 825.9 -0.23 Colombia peso 3926.45 -0.29 Peru sol 3.69 -0.95 Argentina peso 119.5500 -0.11 (interbank) Argentina peso 203.5 1.72 (parallel) (Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Nick Macfie and Diane Craft)

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