Mexican peso, stocks climb after upbeat data

Mexico's peso and stocks gained on Wednesday as rising oil prices and an improving economic outlook outweighed fears about a highly infectious variant of the coronavirus that have dominated trading this week.

The peso and the IPC equities index were set to snap a three-day losing streak as prices of oil - Mexico's top export - jumped about 2%, supported by a weaker dollar.

Latest data showed Mexico's economy grew slightly faster than expected in October, while inflation was a shade below forecast in early December, easing to its lowest rate in six months.

"The recovery of services in October is both noteworthy and surprising," Citi's Adrian de la Garza said as he adjusted the projection for Mexico's 2020 economic contraction to 8.6% from 8.9%.

"We think that November will be a mixed bag and December may see a slight contraction in light of the renewed restrictions... - most notably in Mexico City and Mexico State, which jointly account for about one-quarter of national GDP."

Mexican President Andres Manuel Lopez Obrador said COVID-19 vaccinations will begin in Mexico on Thursday and that he expects the economy to have recovered almost to its pre-pandemic levels by the end of the first quarter of 2021.

Investors are counting on a weakening dollar - on track for its weakest year since 2017 - to boost rallies in everything from U.S. stocks to emerging markets and industrial metals in 2021.

The currency of the world's largest copper producer Chile hit a fresh 14-month high after prices of the metal pushed back towards their multi-year highs.

Argentina's black market peso depreciated to 155/159 per dollar in thin trading volumes, widening the gap between the informal rate and the official, controlled peso exchange rate to 90.7%.

Brazil's real also weakened to levels last seen in early December. Markets in Brazil and Argentina will be closed on Thursday and Friday for the Christmas holidays.

An imminent U.S. stimulus package, optimism over a Brexit trade deal and a fall in U.S. jobless claims spurred appetite for riskier bets on Wednesday, along with hopes that COVID-19 vaccines will be effective against the new virus variant.

The broader Latin American stocks index rose 0.6%, tracking gains in global stocks.

Shares in Brazil's state-controlled oil company Petroleo Brasileiro SA jumped 2.9% after it started the process of selling its 51% stake in the Brazil- olivia gas pipeline as part of a divestment programme.