* Chile"s peso comes off highest level since mid-2019 * Latam stocks rise in early trade * Mexican Dec inflation below expectations, rate cut expected By Ambar Warrick Jan 7 (Reuters) - Mexican and Chilean currencies retreated from recent peaks on Thursday, while most other Latin American currencies fell as civil unrest in the United States prompted a measure of profit taking and safe-haven buying. Chile"s peso, the top performing Latin American currency in 2020, tumbled around 2% from an over 17-month high, while Mexico"s peso dipped 0.7% from a 10-month peak. The dollar bounced off 2018 lows after hundreds of supporters of President Donald Trump stormed the U.S. Capitol on Wednesday in a bid to overturn his election defeat. This came on the heels of Democrats taking control of the U.S. Senate, clearing the way for President-elect Joe Biden to carry out his reform agenda. Emerging market risk assets had rallied on the prospect of higher fiscal spending and corporate taxes in the United States, which weighed on the dollar and local stocks by pushing capital flows out of the country. The prospect of an economic recovery this year also pointed to strong capital flows into emerging markets in the near-term. In Mexico, investors were anticipating the minutes of the central bank"s most recent meeting, where it had decided to leave lending rates unchanged on a surprise dip in inflation and peso stability. But the decision was reached with a narrow majority in the bank"s board. With December inflation coming in slightly below expectations, analysts forecast an interest rate cut next month. "Board members voting for no change likely underlined that the downside surprises in inflation late in the year could have been related to transitory factors... Benign inflation prints in the coming weeks, and the changes in the central bank"s board, support our view of a 25bps cut, to 4.0%," Credit Suisse analysts wrote in a note. Colombia"s peso dipped 0.8%, having touched a 10-month high earlier in the week on strength in oil prices. Recovering global crude demand is expected to benefit the currencies of oil exporters Colombia and Mexico this year. Latin American stocks rose in early trade, with Chile"s benchmark index hitting a near 11-month high. Emerging market stocks are expected to benefit greatly in the near-term from accommodative monetary policy across the globe. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1318.17 0.22 MSCI LatAm 2471.35 0.6 Brazil Bovespa 119834.36 0.62 Mexico IPC - - Chile IPSA 4485.56 1.53 Argentina MerVal - - Colombia COLCAP 1436.03 - Currencies Latest Daily % change Brazil real 5.3250 -0.44 Mexico peso 19.8161 -0.91 Chile peso 710.4 -2.13 Colombia peso 3435.84 -0.69 Peru sol 3.6278 -0.11 Argentina peso 84.9900 -0.09 (interbank) (Reporting by Ambar Warrick in Bengaluru; Editing by Krishna Chandra Eluri)