* MSCI Latam stocks index at 10-month high * Chilean stocks outperform peers this week * MSCI EM stocks index hits record high (Updates prices throughout, adds comments) By Ambar Warrick and Shreyashi Sanyal Jan 8 (Reuters) - Brazilian stocks hit a record high on Friday on expectations of increased stimulus and accommodative monetary policy, while Latin American currencies eyed weekly losses in the wake of record-high coronavirus infection rates. The Bovespa index rose 1.8% to a record high, while MSCI"s index of Latam stocks rose 0.4% to a 10-month high, and was set to add 2.5% this week. MSCI"s index of emerging market stocks rose 2% to hit a record high for the first time since November 2007 as the combination of post COVID-19 economic recovery hopes, mass global stimulus and a weak dollar boosted investor confidence. Chilean stocks were the best weekly performers in the region as markets bet on a solid economic recovery in the country this year. The Democrats" taking of the U.S. Senate this week pointed to increased liquidity measures in the world"s largest economy, boosting the outlook for global equities. "Fresh stimulus hopes lifted global stocks over the last 24 hours ... A unified (U.S.) government as the result of the "blue sweep" victory will smooth the path to more fiscal stimulus. This points to the reflation trade remaining intact," Mark Haefele, chief investment officer at UBS Global Wealth Management wrote in a note. But in local foreign exchange markets, this optimism was cut short as coronavirus infections in major Latin American economies rose at record rates. This saw many regional currencies mark steep losses on Friday, erasing all gains made earlier in the week. Brazil"s real and Mexico"s peso both fell more than 0.5% each, while Chile"s peso marked its worst day in nearly seven months. "We may be in a consolidation phase for now with respect to EM FX, but do think that the USD weakness trade has more to give," Citi analysts wrote in a note. Brazil"s real rose 1.2% on Friday, tracking a rise in prices of iron ore, one of the country"s top exports. But it was set for its worst week since late-September. "Rising new virus cases and fiscal tightening mean that the early months of this year will be much more difficult for the economy," said William Jackson, chief emerging markets economist at Capital Economics. MSCI"s index of regional currencies was set to lose 0.8% this week. The U.S. dollar also saw increased buying after data showed the economy shed jobs for the first time in eight months. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1348.96 2.02 MSCI LatAm 2511.94 0.4 Brazil Bovespa 124565.73 1.78 Mexico IPC 46686.95 1.08 Chile IPSA 4513.46 -0.34 Argentina MerVal 51983.17 -0.985 Colombia COLCAP 1440.27 0.32 Currencies Latest Daily % change Brazil real 5.4229 -0.45 Mexico peso 20.0772 -0.39 Chile peso 708.9 0.49 Colombia peso 3466.4 0.59 Peru sol 3.6057 0.39 Argentina peso (interbank) 85.1200 -0.13 Argentina peso (parallel) 157 3.18 (Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru Editing by Nick Zieminski, Kirsten Donovan)