* Brazilian real outperforms Latam peers * Investors await Yellen speech at 10 a.m. ET * Mexican economy likely shrank 5.4% y/y in Dec By Shreyashi Sanyal Jan 19 (Reuters) - Currencies in Latin America strengthened on Tuesday as the dollar softened ahead of a speech by U.S. Treasury Secretary nominee Janet Yellen, while gains in Mexico"s peso were subdued by discouraging preliminary economic data. Most emerging market currencies and other risk assets gained from the greenback"s weakness, with Yellen expected to talk up the need for major U.S. fiscal stimulus. "Risk markets were greeted kindly on the return from the long weekend ... markets likely anticipate comforting words from Yellen this morning at her confirmation hearing," said Mark McCormick, global head of FX strategy at TD Securities. The Brazilian real added 0.7% against the dollar, outperforming peers in Latin America as local investors kept an eye on offshore events. At home, Brazil started its a nationwide COVID-19 immunisation programme on Monday by distributing doses of a vaccine from China"s Sinovac Biotech after it was approved for emergency use. Mexico"s peso gained 0.2%, capped by a preliminary reading that showed the country"s economy is likely to have contracted by in December by 5.4% from the same month a year earlier. The Chilean peso traded between flat to marginally higher as prices of copper, the country"s main export, steadied. The currency has been subjected to selling pressure since the beginning of the year in the face of ultra-low interest rates in the region and political uncertainty. However, analysts have warned that a potential headwind for the Chilean peso is more likely to be copper prices. Higher oil prices on Tuesday helped the Colombian peso strengthen by 0.5%. The country"s capital, Bogota, will impose nightly curfews for almost two weeks and enters yet another full quarantine this weekend. The MSCI"s index for emerging market stocks hit a record high as ultra-low interest rates and stimulus hopes brightened their prospects. Consensus forecasts suggest that emerging markets stand to benefit from loose monetary policy and expectations of a steady economic recovery this year. Equities stand to gain more from such prospects, with the EM index hitting a series of record highs on the potential for better returns than fixed income and currencies. Key Latin American stock indexes and currencies at 1409 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1376.36 1.28 MSCI LatAm 2505.96 -0.46 Brazil Bovespa 121246.07 0 Mexico IPC 0.00 0 Chile IPSA 4662.75 0.84 Argentina MerVal 0.00 0 Colombia COLCAP 1454.50 0 Currencies Latest Daily % change Brazil real 5.2852 0.69 Mexico peso 19.6333 0.19 Chile peso 734.6 -0.14 Colombia peso 3463.23 0.37 Peru sol 3.6098 0.14 Argentina peso (interbank) 86.1800 -0.12 Argentina peso (parallel) 155 2.58 (Reporting by Shreyashi Sanyal in Bengaluru Editing by David Goodman