* Latam stocks set for best week in five months * Brazilian real outperforms Latam peers for the week * Oil-linked currencies make hefty gains during the week (Adds details, updates prices) By Shreyashi Sanyal and Ambar Warrick Nov 6 (Reuters) - Latin American currencies and stocks extended a near week-long rally on Friday, benefiting from an upbeat mood in emerging markets as the prospect of static U.S. fiscal policy pointed to increased interest in high-yield markets. Mexico"s peso and several Asian currencies - which are expected to benefit from less adversarial U.S. trade policies - gained substantially through the week as Democrat Joe Biden took the lead in the U.S. presidential race, while the Senate leaned towards the Republicans. The peso, which was particularly hit by the Trump administration"s hard line on trade and drive to keep jobs in America, rose 0.5% on Friday, and was set to rise 2.8% this week. The MSCI"s index for emerging market stocks and its Latin American counterpart were set for their best weekly gains in five months. The Latam stocks index is up 11.6% this week. The MSCI"s index of Latin American currencies was also set for its best week since early-June. Brazil"s real led gains across Latam for the day, adding 2.4% after gaining sharply in the last two sessions. The currency was set to add more than 5% for the week, outperforming its Latin American peers. The real was buoyed by general optimism in emerging markets about a Biden victory and encouraging data from its industrial and services sectors through the week. "Despite the fact that Biden becoming President would not necessarily be beneficial for Brazil, as the Brazilian President Jair Bolsonaro considers himself an ally of Donald Trump... for now the move in USD-BRL is dominated by general market sentiment," said You-Na Park-Heger, FX and emerging markets analyst at Commerzbank. The prospect of a Republican-led U.S. Senate saw investors betting on fiscal policy staying largely static. Liquidity-heavy government policies are expected to weigh on the U.S. dollar and treasuries in the mid-term, making emerging markets an enticing prospect for high yield seekers. The more bonds the Fed buys, the more it tends to trickle to higher-yielding markets such as Mexico, Indonesia or South Africa. A jump in commodity prices recently, including oil, has helped the currencies of Colombia and Russia. The Russian rouble is, however, expected to weaken if Trump loses the presidency. But concerns over the fiscal damage of the coronavirus pandemic still persisted, given that several emerging economies were under pressure even before the outbreak. Turkey"s lira notched its tenth straight week of losses as dwindling foreign exchange reserves and insufficient central bank actions weighed. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1175.78 0.82 MSCI LatAm 2017.90 1.81 Brazil Bovespa 100626.29 -0.12 Mexico IPC 38616.29 0.57 Chile IPSA 3785.35 2.2 Argentina MerVal 48250.46 -0.517 Colombia COLCAP 1161.80 -0.11 Currencies Latest Daily % change Brazil real 5.4167 2.36 Mexico peso 20.5750 0.46 Chile peso 752.2 0.49 Colombia peso 3720.75 0.83 Peru sol 3.5907 0.08 Argentina peso 79.0900 -0.08 (interbank) (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Emelia