* Chilean peso set to outperform peers for the week
    * Argentine stocks outpace peers for the week
    * U.S. record rise in COVID-19 cases chokes risk appetite
    * Petrobras up as Mubadala set for talks to buy Bahia
refinery

 (Adds graphic, updates prices)
    By Shreyashi Sanyal and Ambar Warrick
    July 10 (Reuters) - Brazilian stocks were set for their
strongest close in more than four months on Friday, while
broader sentiment remained subdued amid increasing global
coronavirus cases. 
    The Bovespa stock index added about 0.8% after data
showed inflation as measured by the IPCA consumer price index
rose 0.26% in June over May, picking up after the deflation
reported in the previous month.
    State-owned oil company Petrobras rose 1.5% after
it said Abu Dhabi's investment fund, Mubadala Investment Co
          , will enter exclusive talks to purchase Brazil's
second-largest refinery.
    Improving economic indicators in Brazil, Latin America's
largest economy, put its stocks on course for a 3.2% weekly
gain. Still, the country has the second-highest number of
coronavirus infections in the world, behind only the United
States.
    Mexico's peso and the Brazilian real rose
against the dollar, but were set the end the week largely
unchanged. Most other currencies moved in a flat-to-low range
for the day. 
    Chile's peso was set to outperform peers for the
week, tracking strength in the copper market. Chile is  the
world's largest exporter of the red metal.
    Argentine stocks, which did not trade on Friday with
the market closed for the day, outperformed their regional peers
by a wide margin this week amid improving sentiment on the
country's negotiations with its sovereign debt holders.
    
    Sentiment for the day was dampened as new coronavirus
infections reported across the United States marked a record
rise on Thursday.
    Rising coronavirus cases sparked worries of tighter
containment measures, which could delay the economic recovery.
Latam markets have rebounded sharply from a meltdown in March,
but surging cases, political issues, concerns over sovereign
debt and deteriorating economic fundamentals have weighed.
    Mexican stocks fell 1%, with data showing a 1.8%
decline in industrial output in May from April and down 30.7%
year-over-year.     
    "May's release suggests that Mexico's economy has probably
suffered one of the largest peak-to-trough falls in output in
the emerging world," said Nikhil Sanghani, assistant economist
at Capital Economics.
    "What's more, its (Mexico) recovery has been delayed and is
likely to be weaker than in other emerging markets where the
virus is under control."
    The peso was set to lag its peers for the week,
albeit slightly.
    In Venezuela, the congress on Thursday said it hired two
U.S. firms to manage $80 million seized from President Nicolas
Maduro's government after Washington disavowed it and recognized
opposition leader Juan Guaido as the country's legitimate
president.    
    Key Latin American stock indexes and currencies: 
    
    Stock indexes             Latest       Daily % change
 MSCI Emerging Markets         1069.83                  -0.91
                                        
 MSCI LatAm                    1975.48                   0.25
                                        
 Brazil Bovespa               99929.88                   0.78
                                        
 Mexico IPC                   36425.30                  -1.01
                                        
 Chile IPSA                    4028.54                  -0.09
                                        
 Colombia COLCAP               1144.79                   0.15
                                        
                                                             
       Currencies             Latest       Daily % change
 Brazil real                    5.3258                   0.30
                                        
 Mexico peso                   22.4710                   0.69
                                        
 Chile peso                      792.4                  -0.56
                                        
 Colombia peso                 3608.37                   0.16
 Peru sol                       3.5017                  -0.06
                                        
 


    
 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Dan
Grebler)