* COVID-19 cases still rising in Latam - PAHO * Brazilian stocks rise on Vale boost * Brazil rate hike possible in Q1 - economist * Chile launches COVID vaccination drive (Updates prices) By Ambar Warrick and Susan Mathew Feb 3 (Reuters) - Latin American currencies slipped on Wednesday, with Brazil"s real giving up session gains against a steady dollar amid worries about rising COVID-19 cases in the region. Cases and deaths related to COVID-19 continue to increase in Latam countries, the Pan American Health Organization said on Wednesday, while infections fall in neighboring Canada and United States. Brazil"s real gave up gains made on expectations of COVID-19 relief measures, spurred by the country"s newly elected congressional leadership saying they would seek ways to extend pandemic relief payments to impoverished citizens. Reports of the move, as well as President Jair Bolsonaro getting a stronger standing in Congress, had pushed up the currency this week. But it was still nursing steep losses from last month, and is trading negative for the year. Brazil"s central bank also warned that more fiscal spending could erode the country"s fiscal credibility. Signs of increasing inflation in the country also pointed to pressure on the bank to hike interest rates. "The (central) bank could be willing to front-load rate hikes in order to prevent the shocks spreading to other prices in the economy," economists at TS Lombard wrote in a note. "The extension of the emergency aid would give the central bank even more arguments to hike as early as March: the additional fiscal stimulus could help offset the lower level of monetary stimulus, while demanding a more cautious stance of the bank amid the rising fiscal risks." Brazilian stocks rose, with iron ore miner Vale climbing 3.6% as it neared a 37 billion reais ($6.88 billion) deal to settle claims over a mining disaster in 2019 that killed some 270 people. Mexico"s peso slipped 0.5% after rallying more than 2% over the past two days. The currency has been supported by a spike in silver prices and increasing optimism over bumper stimulus measures in the United States, which is a major trading partner. Losses in the peso were somewhat limited by stronger oil prices. Risk appetite has also improved this week, enabling large gains across emerging market assets on the rollout of global vaccine programs in the space, as well as expectations of more stimulus measures. But most of them are still trading negative for the year. Chile"s currency and stocks both fell, even as the country on Wednesday launched coronavirus vaccination programmes, having set itself the target of inoculating around five million citizens against the disease by the end of March. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1395.09 1.01 MSCI LatAm 2385.61 0.62 Brazil Bovespa 119629.65 1.18 Mexico IPC 43952.41 0.24 Chile IPSA 4401.17 -0.36 Argentina MerVal 50054.33 0.74 Colombia COLCAP 1369.15 0.06 Currencies Latest Daily % change Brazil real 5.3748 -0.39 Mexico peso 20.2100 -0.47 Chile peso 734 -0.38 Colombia peso 3533.83 -0.18 Peru sol 3.6408 -0.16 Argentina peso 87.8000 -0.10 (interbank) (Reporting by Ambar Warrick in Bengaluru; Editing by Andrea Ricci and Jan Harvey)