* Rate of new COVID cases in Mexico more than double overnight * Brazil"s real down more than 4% so far in July * Latam stocks Recover from two-week lows * EM stocks to outperform global equities - UBS (Updates prices) By Ambar Warrick and Susan Mathew July 21 (Reuters) - Colombia"s peso fell on Wednesday on fears of renewed civil unrest there, while most other Latin American currencies and stocks as risk appetite made a cautious return after a brutal start to the week. Returning from a day"s holiday, Colombia"s peso fell up to 1% to November lows, even as the dollar lost momentum. The Colombian government on Tuesday presented a $3.95 billion tax reform bill to Congress, while unions and student groups sought to revive the street protests that helped scupper the reform"s original iteration. The law would raise 15.2 trillion pesos per year, significantly less than the 23.4 trillion pesos sought by the government in an April proposal. "Given that the bill does not go far enough to stabilize the fiscal and debt dynamics, the new administration will be challenged to present a new structural fiscal reform in the first two years in office worth at least 1.5% of GDP in order to shore up the debt dynamics," Goldman Sachs analysts wrote in a note. Anti-government protests, which had originated from discontent with the bill, ravaged Colombia earlier this year, and combined with underlying economic weakness from the pandemic, cost Colombia two out of three of its investment-grade debt ratings. Concerns over global growth being dented by the Delta variant of the coronavirus also persisted. The rate of new infections in Mexico more than doubled from Monday to Tuesday. Mexico"s peso extended losses to the third straight session, hitting a one-month low. Meanwhile, Brazil"s real rose 0.6%, but is down more than 4% on the month. A recent corruption scandal along with growing disapproval of the President Jair Bolsonaro has hurt the real over the past few weeks. Adding to the noise, Bolsonaro said on Wednesday he is planning a ministerial shakeup next week, seeking to shore up power ahead of elections next year. Latam stocks rose slightly, with the MSCI index adding 1.3%. But they were recovering from a near two-month low. "For emerging markets (stocks)... the main driver is a strong expansion in corporate earnings. We expect 37% growth in earnings per share this year," strategists at UBS"s chief investment office wrote in a note, also noting a narrowing vaccination gap with developed markets. "Given the combination of tailwinds and relatively appealing valuations, we expect the MSCI Emerging Markets index to gain around 10% by the end of December, outperforming global equities," they said, adding Mexico, Malaysia and India are their most preferred market in the EM universe. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1314.49 0.26 MSCI LatAm 2531.69 1.31 Brazil Bovespa 125525.13 0.1 Mexico IPC 49984.60 1.48 Chile IPSA 4280.55 -0.27 Argentina MerVal 65563.06 3.425 Colombia COLCAP 1256.04 1.45 Currencies Latest Daily % change Brazil real 5.1994 0.59 Mexico peso 20.1920 -0.26 Chile peso 752.5 0.72 Colombia peso 3851 -0.51 Peru sol 3.946 -0.20 Argentina peso 96.3600 -0.02 (interbank) (Reporting by Ambar Warrick and Susan Mathew in Bengaluru; Editing by Angus MacSwan)