* Chilean economy expands in November * Brazil, Chilean stocks rise in early trade * Oil-sensitive Colombian, Mexican currencies gain By Ambar Warrick Jan 4 (Reuters) - Chile"s peso outpaced its peers on Monday after economic activity was seen expanding in November, while other Latin American stocks and currencies marked a strong start to 2021 on optimism over an economic recovery. The currency jumped 1.1% to a 17-month high after Chile"s central bank said economic activity grew in November for the first time since the coronavirus pandemic arrived in the South American nation. A surge in the prices of copper, the country"s top export, made Chile"s peso the only Latin American currency to gain in 2020. Copper prices are also considered a barometer of economic sentiment, given the red metal"s importance in industrial activity. For the day, broader Latin American currencies rose tracking weakness in the U.S. dollar and signs of economic expansion in China. The country is a top trade destination for most of Latin America. "Outlook for the USD remains bearish... the combination of a collapsed term premium, vaccine implementation and reflation tactics are fairly dominant forces," Mazen Issa, senior FX strategist at TD Securities wrote in a note. Latin American currencies were also seen as primed for more upside after severely underperforming their broader emerging market peers last year. Brazil"s real, which was one of the worst performing emerging market currencies last year, rose 0.8% to the dollar in early trade. Data showed the pace of expansion in Brazil"s manufacturing sector decelerated in December to its slowest since July. But reading was still in expansion territory, indicating that an economic recovery in Latin America"s largest economy was still ongoing. Currencies of oil exporters Mexico and Colombia rose tracking recent strength in the crude market, as markets bet on a recovery in demand and output cuts from the OPEC. Regional stocks also rose for the day, after underperforming their emerging market peers in 2020. Brazil"s Bovespa index added about 0.5%, while Chilean stocks rose 1.6%. Accommodative monetary policy and increased liquidity measures are expected to keep investors seeking yields in equities through the mid-term. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1307.39 1.21 MSCI LatAm 2483.37 1.29 Brazil Bovespa 119661.67 0.54 Mexico IPC - - Chile IPSA 4244.50 1.61 Argentina MerVal - - Colombia COLCAP - - Currencies Latest Daily % change Brazil real 5.1498 0.79 Mexico peso 19.7424 0.67 Chile peso 702.7 1.14 Colombia peso 3406.52 0.23 Peru sol 3.618 0.00 Argentina peso 84.6900 0.27 (interbank) (Reporting by Ambar Warrick in Bengaluru Editing by Alistair Bell)