* Socialism jitters hit sol * Brazil"s real best weekly performer * MSCI Latam FX set for 1.7% weekly gain By Ambar Warrick April 23 (Reuters) - Mexico"s peso rose on Friday on stability in the oil market and a re-emergence of the carry trade, while Peru"s sol headed for its worst week in more than 28 years on concerns over a socialist presidency. The peso rose about 0.4%, hovering around three month highs as oil prices stabilized after three days of losses. The currency was set for a fourth straight week of gains, after higher-than-expected inflation data this week suggested that the central bank would keep rates on hold for longer. Relatively higher interest rates and economic stability have made the peso a popular destination for carry trades - a strategy that involves borrowing a currency at a low interest rate, and using it to invest in another currency with a higher yield. Retail sales data for February also improved from January, although the reading was likely from before a damaging new wave of COVID-19 infections hit the country and Latin America more broadly. Latam currencies retreated for the day, but were set for a fourth straight week of gains, as continued weakness in the dollar and Treasury yields benefited risk-driven assets. The greenback was set for a third straight week of losses, while the MSCI"s index of Latam FX was set to add 1.7%. "With the U.S. economy quite far along on the re-opening side, a lot may already be in the price. We expect a catch up on reopening outside of the U.S., which should be EMFX positive," Citi analysts wrote in a note. "While a tapering announcement remains a risk, the timing is unclear. We are tactically short USD in Latam and to a lesser extent more positive on duration." Brazil"s real fell 0.2% on Friday, but was the best weekly performer across the region with a 2.2% rise, as progress towards a 2021 budget improved sentiment. But Latam"s largest economy has been hit the hardest in the region by the pandemic, with investors on edge over strained government finances. Peru"s sol was the worst weekly performer in Latam, down 3.2% and on course for its worst week since Oct. 1992. The currency has lost for the past five sessions, as a series of polls showed socialist presidential front-runner Pedro Castillo keeping his lead over right-wing rival Keiko Fujimori. But the sol appeared to have stabilized, trading 0.1% higher on Friday after Castillo assured the Andean nation he would not nationalize companies and would honor the rule of law. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1353.52 0.9 MSCI LatAm 2424.55 0.97 Brazil Bovespa 120721.30 1.13 Mexico IPC 48940.45 -0.31 Chile IPSA 4855.80 0.24 Argentina MerVal - - Colombia COLCAP 1295.46 -0.05 Currencies Latest Daily % change Brazil real 5.4625 -0.15 Mexico peso 19.8450 0.35 Chile peso 711.4 -0.73 Colombia peso 3634.38 -0.01 Peru sol 3.7498 0.13 Argentina peso 93.1200 -0.04 (interbank) (Reporting by Ambar Warrick in Bengaluru; Editing by Kirsten Donovan)