* Colombian President withdraws proposed tax reform * Brazil"s manufacturing sector decelerates * Chile"s peso outperforms as economic activity jumps in March (Recasts with sol, updates prices) By Shashank Nayar and Ambar Warrick May 3 (Reuters) - Colombia"s peso led losses across Latin American currencies on Monday, hitting a six-month low after the government withdrew a controversial proposed tax reform over the weekend, while Peru"s sol tumbled on more concerns the country may elect a socialist president. Colombia"s peso dropped 1.3% after President Ivan Duque said he would withdraw a tax reform plan amid deadly protests and widespread lawmaker opposition. Since the tax reform, which originally sought to raise more than $6 billion, was sent to Congress on April 15, the peso has depreciated 5.5%. Analysts also questioned the odds of a possible ratings cut which would place Colombia debt instruments below investment grade in case the policy is totally shelved. "The rating agencies may question not only the path of debt dynamics but also future political commitment/ability to address the challenges down the road —a key consideration when deciding a cut from investment grade," wrote analysts at J.P. Morgan in a note. Colombian stocks plunged 2.8%, while MSCI"s index of Latin American stocks gained 0.3%. The Peruvian sol tumbled 0.8% to near record-low levels after presidential election front-runner, socialist Pedro Castillo, vowed to curb foreign firms "looting" the Andean nation"s mining wealth. Concerns over a wave of support for socialist policies in Peru have rattled its financial markets this year, with the sol tumbling to record lows last month. Still, broader Latam currencies have benefited from recent weakness in the U.S. dollar and Treasury yields, having marked strong gains in April. The Chilean peso surged 0.9%, leading gains across Latam after economic activity rose at its strongest pace since 2018 in March, an early sign of green shoots in the economy of the world"s top copper producer. Brazil"s real was flat after data showing that growth in the country"s manufacturing sector slowed in April. The data also showed prices charged to customers rose towards their recent historic highs, signaling higher inflation levels. Mexico"s peso rose 0.2%, tracking a weaker dollar and a jump in oil prices on optimism over a strong demand rebound in countries including the United States and China. The Argentine peso dropped 0.1% after coronavirus cases hit 3 million on Sunday, highlighting concerns over a damaging wave of COVID-19 infections across Latin America. Foreign net flows to emerging market equity and debt portfolios picked up in April, with flows to Chinese equities taking a large share of the total, data from the Institute of International Finance showed on Monday. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1339.31 -0.62 MSCI LatAm 2383.46 0.33 Brazil Bovespa 119135.03 0.2 Mexico IPC 48430.76 0.88 Chile IPSA 4580.68 2.41 Argentina MerVal 48816.86 -0.488 Colombia COLCAP 1215.49 -2.81 Currencies Latest Daily % change Brazil real 5.4317 -0.03 Mexico peso 20.1866 0.20 Chile peso 703.7 0.88 Colombia peso 3801.2 -1.31 Peru sol 3.8158 -0.84 Argentina peso 93.6700 -0.12 (interbank) (Reporting by Shashank Nayar in Bengaluru; Editing by Andrea Ricci and Hugh Lawson)