EMERGING MARKETS-Commodity-linked Latam FX falls; Argentine bonds rally on debt deal

    * Brazil's largest lender Itau Unibanco falls after weak
    * Chilean, Mexican stocks rise
    * Weak oil, metal prices hit FX
    * Argentine bond prices up 8.1% on average- Traders

    By Ambar Warrick
    Aug 4 (Reuters) - Most Latin American currencies were
undercut by weakness in commodity markets on Tuesday, while
Argentine stocks and bonds rallied after the country struck a
deal to restructure $65 billion in sovereign debt.
    Argentina said it had reached a deal with three creditor
groups, which potentially could help it climb out of a damaging
default and revive the recession-hit economy. The country has a
total debt pile of $323 billion, around 90% of gross domestic
    Argentina's Merval stock index rose nearly 5%, while
the peso showed little reaction to the deal. The currency
has been heavily regulated by the government to maintain
stability in its currency market. 
    "The agreement with external bondholders is a welcome
development in our view," Goldman Sachs analysts wrote in a
    "It rules out the possibility of disruptive outcomes
associated with a widespread sovereign default, providing some
certainty to investors, businesses and households, and hopefully
contributing to alleviate some of the pressure on the parallel
exchange rate market."
    Traders said Argentine bond prices rose 8.1% on average.
    The Mexican and Colombian pesos sank in tandem
with oil prices, while weakness in the copper market undercut
the Chilean peso. 
    Brazil's real was unchanged ahead of a widely
expected interest rate cut on Wednesday, as the country's
central bank continues to try and mitigate the impact of the
    Data showed that industrial output in the country marked its
second-biggest increase ever in June, as the sector continued to
claw back from disruptions caused by the pandemic.
    Brazil's Bovespa stock index was pulled down by
heavyweight lender Itau Unibanco Holding, after its
quarterly profit plunged 40%.
    Other stocks markets in the region rose, tracking some
positive cues from Wall Street and U.S. manufacturing data.
    Chilean stocks rose about 0.8%. The country's central bank
is likely to stay pat on its benchmark interest rate, through at
least the next 12 months, a central bank poll of traders showed
on Tuesday.
    Key Latin American stock indexes and currencies:
    Stock indexes             Latest     Daily % change
 MSCI Emerging Markets         1088.89              1.02
 MSCI LatAm                    2025.64              0.02
 Brazil Bovespa              102662.87             -0.16
 Mexico IPC                   37682.47              0.36
 Chile IPSA                    3978.63              0.81
 Argentina MerVal             55730.93             6.146
 Colombia COLCAP               1136.55               0.3
       Currencies             Latest     Daily % change
 Brazil real                    5.3089              0.06
 Mexico peso                   22.8203             -0.86
 Chile peso                      764.7             -1.01
 Colombia peso                 3790.75             -0.82
 Peru sol                       3.5487             -0.22
 Argentina peso                72.5600             -0.06

 (Reporting by Ambar Warrick in Bengaluru; Editing by Sandra

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