* Brazil"s real extends gains to third straight session * Pemex move worsens credit outlook for Mexico - Citi * Colombia eyes tax reform bill next week (Adds comments, updates prices throughout) By Susan Mathew and Shreyashi Sanyal March 19 (Reuters) - Most Latin American currencies joined broader emerging market peers in the black on Friday, looking to end a week dominated by monetary policy surprises on a high note. Mexico"s peso inched up 0.1% to stay near one-month highs and was on course to end the week with a gain of 1.2%, while Chile"s peso rose 0.9%. Emerging market (EM) currencies got a boost this week from the U.S. Federal Reserve maintaining its dovish stance, leaving interest rates rate near zero. Low rates in the United States bode well for high yielding currencies as the interest rate differential makes them more appealing for carry trades. With inflationary pressures driving bumper rate hikes in Brazil and Turkey and a surprise increase by Russia, the EM currencies index was on track to break a four-week losing streak. Brazil"s real extended gains to a third straight session, leaving it up around half a percent since last Friday. But with COVID-19 cases still surging in Latin America, economic fundamentals still reeling from the pandemic, and political worries persisting, Latam assets have lagged EM peers. On Thursday, Mexican state-oil firm Pemex"s chief executive said the government had agreed to absorb regular debt payments this year for Latam"s most indebted company. With $113.2 billion in debt as of 2020, Pemex"s burden on Mexico has seen credit rating downgrades by top agencies. "This announcement shows that the strategy of the government will continue to be to support Pemex in gradual steps, without a significant change in its business plans, putting increased pressure on sovereign finances," said Citi Research strategists. "This means a continued worsening credit outlook for the sovereign and the need to find additional resources, most likely through a fiscal reform to be presented in September, together with the 2022 budget." In Colombia, market participants will be eyeing a tax reform bill the government will propose to congress next week, which would increase tax take by the equivalent of 1.5% of GDP. The country"s peso dropped 0.4%. "This legislation could have a major bearing on the country"s sovereign investment grade rating," said Nikhil Sanghani, Latin America economist at Capital Economics. "Credit ratings agencies have stated that pushing through tax reform will be key for Colombia to maintain its investment grade rating... And previous attempts at tax reform have often been watered down in Congress. The same may happen once again." On stock markets, state-controlled Brazilian lender Banco do Brasil fell up to 0.8%, after its chief executive submitted his resignation on Thursday after months of pressure for his ouster from President Jair Bolsonaro. Planemaker Embraer rose more than 2% after reporting its best quarter so far during the COVID-19 pandemic. Key Latin American stock indexes and currencies at 1821 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1337.82 -0.71 MSCI LatAm 2351.68 1.22 Brazil Bovespa 115971.39 0.99 Mexico IPC 47555.33 -0.04 Chile IPSA 4843.34 -0.72 Argentina MerVal 48908.30 0.636 Colombia COLCAP 1322.01 -0.27 Currencies Latest Daily % change Brazil real 5.4643 1.86 Mexico peso 20.4981 -0.13 Chile peso 714.1 0.84 Colombia peso 3556.9 -0.33 Peru sol 3.7148 -0.19 Argentina peso (interbank) 91.3500 -0.05 Argentina peso (parallel) 141 2.13 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru. Editing by Mark Potter, Kirsten Donovan)