* Benchmark Selic rate seen up 75 bps
    * Brazil's industrial production falls less than expected

    By Shashank Nayar
    May 5 (Reuters) - Brazil's real led gains across Latin
American currencies on Wednesday after strong economic data and
on expectations of a large rate hike by the central bank, while
Colombia's peso fell further on continued protests in the
    The real rose 0.7% to 5.39 as investors bet on
another 75 basis point hike in the benchmark Selic rate to 3.5%,
after the bank began a tightening cycle this year to help curb
elevated inflation rates and support weak fiscal conditions.
    The real lost almost 30% of its value last year as Brazilian
interest rates were cut to a record low 2% in response to the
COVID-19-induced recession, and has declined 4% so far this year
as a jump in infections made investors fret over the fiscal
    "There is some risk that the BCB (Brazilian Central Bank)
moves with a more aggressive hike today and/or continues to
signal a continued pace of aggressive tightening in the near
term," said Ned Rumpultin, a strategist at TD Securities.
    "We don't see BRL as necessarily cheap around 5.50 - and
certainly not at 5.00. For that, we think the Selic rate will
need to be at least 300bps higher."
    Industrial production in Brazil fell in March for a second
consecutive month, figures showed, but the decline was not as
steep as economists expected, meaning first quarter output
growth accelerated.
    MSCI's index of Latin American stocks jumped
2.17% in early trade, recovering from a sharp selloff on
    Colombia's peso fell for the fifth consecutive
session, falling 0.8% to a six-month low as countrywide protests
against a now withdrawn controversial tax reform were set to
continue on Wednesday.
    Chile's peso and Mexico's peso were flat to
the dollar despite a rise in copper and oil prices, as hints of
the potential for higher U.S. interest rates weighed on
high-yielding assets.
    Treasury Secretary Janet Yellen said on Tuesday that rate
hikes may be needed to prevent overheating and quell coming
inflationary pressures.
    The Argentine peso was largely unchanged and the
Peruvian sol gained 0.2%.

    Key Latin American stock indexes and currencies:
                              Latest     Daily % change
 MSCI Emerging Markets         1335.01                  0
 MSCI LatAm                    2407.62               2.17
 Brazil Bovespa              119524.53               1.54
 Mexico IPC                   48468.47               0.29
 Chile IPSA                    4716.80               1.45
 Argentina MerVal             49091.93              0.897
 Colombia COLCAP               1233.95               1.34 Currencies             Latest     Daily % change
 Brazil real                    5.3923               0.73
 Mexico peso                   20.1880              -0.04
 Chile peso                      703.3               0.01
 Colombia peso                 3854.65              -0.75
 Peru sol                       3.8308               0.05
 Argentina peso                93.7500              -0.03

 (Reporting by Shashank Nayar in Bengaluru; editing by Barbara

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