* Peru sol at four-month low on election jitters
* Colombia peso jumps, helped by ratings upgrade bets
* Brazil real firms 0.7 pct, Mexico peso 0.52 pct
* U.S. jobless claims back bets for low rates
By Michael O'Boyle
MEXICO CITY, April 14 (Reuters) - Brazil's real and Mexico's peso jumped on Thursday, backed by bets that weaker U.S. growth will keep ultra-easy monetary policy in place, but a possible retreat in the euro could reverse gains.
After rallying since mid-March, the two Latin American currencies have settled into tighter ranges, and further strong gains could be limited as investors gauge whether risks to global growth from high oil prices and inflation are increasing.
As long as fears about global growth do not rise markedly, slower expansion in the United States would cause the Federal Reserve to stick with its $600 billion asset-buying program until June and keep U.S. rates near zero through 2011.
"That is good for emerging markets. People still want higher-yielding, risky assets," said Doug Smith, head of Latin America research at Standard Chartered in New York.
Data showed U.S. initial claims for unemployment benefits rose unexpectedly last week, adding to a string of weaker data. For details, see [ID:nN14146589].
"If things turn out even worse, it could have a negative effect on Mexico, but we are not at that point yet," Smith added. The United States is Mexico's top trading partner.
Mexico's peso
Brazil's real
But investors continue to find ways around authorities' efforts and recently pushed the real to its strongest since August 2008.
Brazil has seen a tide of speculative flows from investors seeking to game low interest rates in developed economies against the pay-off of Brazil's double-digit interest rates.
Strategists at Citigroup noted that Latin American currencies have recently increased their correlation with the euro while the tendency of the region's currencies to track U.S. stocks has faded.
The dollar has weakened against the euro and emerging market currencies as the U.S. central bank is seen lagging Europe in raising interest rates.
"At this point we continue to expect euro to move higher and hence think Latam FX may not sell off too much should (the S&P 500) drift lower near term," Citigroup strategists wrote in a note to clients. However, with a lot of hikes already priced into the euro, the "risk of Latam FX selling off due to a weaker euro has admittedly increased," they added.
Both Mexico's peso and Brazil's real have so many investors betting on further gains that any sharp reversal can spur cascading losses as the hoard of investors rush to get out of positions, as was seen earlier this week. [nN12198414]
Colombia's peso
Traders said rumors Colombia -- which regained its investment grade credit status from Standard and Poor's last month -- would soon get an upgrade from another rating agency.
A second agency upgrade is a requirement before many institutional investors could pick up Colombian assets.
Chile's peso
Reports of quickening inflation in China pointed to more monetary tightening, which investors worried would hit demand for industrial metals.
Peru's sol closed at its weakest since December amid continued concerns that a left-wing candidate could win a presidential run-off election. [ID:nVOTEPE]
But the currency pulled back from its session low as the countries stock market rebounded after a 12 percent slump.
The sol