* Mexican peso set to outpace peers this week * Latam stocks set for best week in 2 months * Chile"s peso lags peers this week (Updates prices) By Ambar Warrick and Susan Mathew Feb 5 (Reuters) - Brazil"s real jumped more than 1% on Friday after the economy minister said the country was ready to increase spending to combat a second wave of COVID-19, while strength in oil markets helped crude exporter Mexico"s peso. The real surged after Economy Minister Paulo Guedes said the country will open spending taps "quickly" to tackle the second wave of the COVID-19 pandemic if Congress demands it, but with an eye on longer-term fiscal stability. Brazil treads a precarious line on fiscal spending, after measures to combat the virus helped cause a record deficit in 2020. A report said the government was also in talks to reduce taxes on fuel- a move that could help cool inflation. A Reuters poll showed Brazil"s real will hold in last month"s trading range in the short term, with strategists closely following discussions over new stimulus plans. Mexico"s peso rose 1.2%, while Colombia"s peso added 0.1% against a dollar hit by a disappointing U.S. jobs report strengthening the case for President Joe Biden"s $1.9 trillion stimulus package. Oil prices hit a one-year high on expectations of recovering demand and supply curbs by producer group OPEC and its allies. Mexico"s peso was set to outperform its peers for the week with an over 2% rise - its biggest weekly gain in three months, having marked large gains earlier in the week on a spike in silver prices. But the currency was dealt a blow after the supreme court on Wednesday struck down the government"s crucial energy sector reform. "Despite the recent positive prints... the outlook for real activity in Mexico remains uninspiring due to a combination of mostly domestic factors, including the underwhelming policy response, particularly on the fiscal front," Goldman Sachs analysts said. Chile"s peso was among the worst performing Latam currencies this week, set for a 0.6% loss on weakness in the prices of copper, the country"s largest export. The currency fell half a percent on Friday. Latin American stocks rose on Friday, with the MSCI"s index adding 2%. The index was also set for its best week since early-December, as it recovered from a series of weekly losses. Sao Paulo"s Bovespa led gains, up 1.3%, as Petrobras jumped after Brazil"s President Jair Bolsonaro said he won"t interfere with pricing policy set by the oil major, but would instead seek to reduce prices via tax changes. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1396.65 0.65 MSCI LatAm 2412.71 2.06 Brazil Bovespa 120783.26 1.28 Mexico IPC 44344.44 0.4 Chile IPSA 4450.55 0.87 Argentina MerVal 51125.16 0.873 Colombia COLCAP 1369.31 0.71 Currencies Latest Daily % change Brazil real 5.3780 1.28 Mexico peso 20.1389 1.15 Chile peso 736.7 -0.23 Colombia peso 3553.75 0.08 Peru sol 3.6367 0.17 Argentina peso 88.0000 -0.09 (interbank) (Reporting by Ambar Warrick in Bengaluru; editing by Philippa Fletcher and Alistair Bell)