* Mexico"s peso set for third straight week of gains * Brazil"s real leads losses for the day * MSCI Latam stock index down 1.1% (Adds details, updates prices) By Shriya Ramakrishnan and Ambar Warrick Nov 20 (Reuters) - The Mexican and Colombian pesos led gains across Latin American currencies on Friday thanks to higher crude prices, while Brazil"s real was the biggest faller on fears of a second wave of coronavirus infections. Most regional currencies were set for weekly gains as investors viewed progress towards a COVID-19 vaccine as a net positive for sentiment. Mexico"s currency, which rose about 0.5% to the dollar, was also set to outpace its regional peers for the week, as the prospects for effective COVID-19 vaccines and hopes that OPEC and its allies will keep production in check lent support to oil prices. The currency recently benefited from the Mexican central bank pausing its rate-cutting cycle. "MXN is a carry story pure and simple. When adjusting for both volatility and liquidity it is still the world"s number one carry currency," said Christian Lawrence, senior market Strategist at Rabobank. "Any periods of rising demand for risk will see support for MXN. Domestic fundamentals don"t matter at the moment." Colombia"s peso rose 0.5%, while Brazil"s real led losses for the day, shedding 1.3% against the dollar as fears of a second wave of infections in Latin America"s largest economy grew. But the currency was set to gain for the week after the government raised its growth forecast for the year and pledged to fast track reforms to privatisation and fiscal spending. Brazil"s government also trimmed its year-end budget deficit forecast thanks to an anticipated reduction in mandatory spending and an increase in revenues. Peru"s sol fell 0.5%, but was set to end a volatile week slightly higher as political tensions in the country cooled after the appointment of interim President Francisco Sagasti. A gauge of Latin American stocks fell 1.1% during the day, but was still set to end the week higher. Chile"s peso fell 0.5% even as prices of its main export, copper, surged to their highest in 29 months on Friday. Argentina"s central bank on Thursday said companies that participate in the country"s natural gas production plan will have free access to the official foreign exchange market. The move opens a potential loophole in strict capital controls which have been in place since August last year, aimed at protecting foreign exchange reserves, after the collapse of the peso currency. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1208.74 0.69 MSCI LatAm 2159.51 -1.09 Brazil Bovespa 105999.53 -0.63 Mexico IPC 41884.48 0.04 Chile IPSA 4054.32 0.65 Argentina MerVal 51156.96 0.406 Colombia COLCAP 1230.70 -0.01 Currencies Latest Daily % change Brazil real 5.3791 -1.25 Mexico peso 20.0770 0.51 Chile peso 762.9 -0.52 Colombia peso 3630.95 0.47 Peru sol 3.5947 -0.53 Argentina peso 80.3500 -0.09 (interbank) (Reporting by Shriya Ramakrishnan in Bengaluru; Editing by