* Brazil's real outperforms regional peers for the week * Chilean peso suffers sharp weekly decline * Latam stocks index set to fall for the week (Updates prices throughout, adds comments) By Shreyashi Sanyal Jan 15 (Reuters) - Brazil's real snapped a three-day winning streak on Friday after the country reported its first decline in retail sales in seven months, although the currency was set to outperform its Latin American peers for the week on improving risk sentiment. The real fell 1.5% against the dollar as official figures showed retail sales in Latin America's largest economy unexpectedly fell in November, mainly driven by a sizeable fall in sales of food products. "The survey breakdown suggests that those components that were performing well during the peak of the pandemic are now contracting (food/beverages/supermarket or furniture/home appliances), while other components that were more negatively affected during that period keep recovering (apparel or cars)," Citi strategists wrote in a note. Global risk sentiment had shown signs of improving early in the week, which put the real on track to cap it with a gain of 2.3%. But a travel ban imposed by Britain over a Brazilian variant of the coronavirus hurt sentiment on Friday. The MSCI's index for Latin American currencies was set to end the week higher, rising 1.1%. Most riskier assets have gained this week on anticipation that the pace of the global economic recovery would accelerate as COVID-19 vaccines start to roll out across the world. Sentiment was also boosted by hopes of a fiscal boost from U.S. President-elect Joe Biden's $1.9 trillion stimulus proposal. The Mexican peso fell 0.2% on Friday, but was set for its sharpest weekly gain in nearly one month on improving economic data. Among weekly decliners, Chile's peso led the descent with a 3% drop. Earlier in the week, the country's central bank announced a plan to purchase $12 billion over the next 15 months to replenish and expand its foreign currency reserves. The currency dropped 1% in afternoon trading on Friday. Chileans are also gearing up to vote for a new 155-member constitutional body in April. "The downside risks to the currency are limited as the central bank prepares to backstop the peso against political risks," said William Jackson, chief emerging markets economist at Capital Economics. "Social tensions could escalate over the drafting of the new constitution, and there may be a populist shift in November's general election ... a bigger headwind will come from a fall in copper prices." Chile is the world's largest copper producer. Oil-exporter Colombia's peso fell 0.5% and was also set to drop for the week, tracking losses in crude prices. Equities across emerging markets fell on Friday, with the MSCI's index for Latin American stocks set for a weekly decline of 2.1%. Key Latin American stock indexes and currencies at 1847 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1358.11 -0.92 MSCI LatAm 2485.69 -2.39 Brazil Bovespa 121152.76 -1.89 Mexico IPC 45868.45 -0.44 Chile IPSA 4580.55 -1.3 Argentina MerVal 50633.54 -0.884 Colombia COLCAP 1449.77 -1.18 Currencies Latest Daily % change Brazil real 5.2908 -1.51 Mexico peso 19.7420 -0.18 Chile peso 733.4 -0.98 Colombia peso 3459.98 -0.45 Peru sol 3.6127 -0.11 Argentina peso (interbank) 85.7300 -0.08 Argentina peso (parallel) 155 2.58 (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Angus MacSwan and Paul Simao)