* Real outperforms Latam peers * Mexico and Colombia pesos retreat from 9-month highs * Chile central bank expected to hold rates (Adds comments, updates prices throughout) By Sruthi Shankar and Medha Singh Dec 7 (Reuters) - The Brazilian real jumped on Monday ahead of the central bank meeting later this week while demand for most other Latin American currencies was dimmed by new rounds of restrictions to curb the spread of the novel coronavirus. The real breached the psychological level of 5.10 against the dollar. While the bank is likely to maintain the benchmark Selic rate at a record low of 2.0% on Wednesday, there are growing expectations it will signal the start of a tightening cycle from the second half of 2021, according to a Reuters poll. The currency has posted strong gains in the recent weeks on hopes that a rollout of COVID-19 vaccines will speed up an economic revival, even as concerns remain about a second wave of cases and Brazil"s public finances. "Against the background of the historically low key interest rates level the BRL remains susceptible, and concerns about the fiscal policy discipline of the Bolsonaro government could also boil up again at any point in time," Commerzbank analysts wrote in a note. U.S. investment bank Morgan Stanley said it was sticking to its core view that developing economy currencies and select countries" bonds would continue to climb, but was dialing back its bullish bets after November"s surge. Brazil"s Bovespa touched its highest level in more than 10-months, with shares in airline Gol Linhas Aereas Inteligentes jumping 5% after it made a proposal to absorb loyalty program Smiles Fidelidade. Smiles rose 3.8%. The pesos of Colombia and Mexico eased from nine-month highs as a subdued appetite for risk globally spilled over. Mexican President Andres Manuel Lopez Obrador nominated finance ministry official Galia Borja to serve as a new deputy governor of the central bank, replacing one of the most hawkish members of the monetary authority. The Chilean peso edged lower ahead of the central bank"s monetary policy announcement. Traders expect Chile"s 0.50% interest rate, its lowest in a decade, to be held unchanged. Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1252.90 0.15 MSCI LatAm 2391.87 1 Brazil Bovespa 114232.09 0.42 Mexico IPC 43158.27 -1.12 Chile IPSA 4130.72 -1.44 Argentina MerVal 54730.38 -0.765 Colombia COLCAP 1378.51 2.78 Currencies Latest Daily % change Brazil real 5.0718 1.03 Mexico peso 19.8455 -0.39 Chile peso 745 -0.12 Colombia peso 3488 -0.69 Peru sol 3.6028 -0.44 Argentina peso (interbank) 81.6500 -0.10 Argentina peso (parallel) 146 3.42 (Reporting by Sruthi Shankar and Medha Singh in Bengaluru; Editing by Alison Williams and Grant McCool)