* Peru's sol down 0.9% * Brazil's real leads gains, c.bank due on Wednesday * Chile Dec. economic activity disappoints (Adds details on Peru, updates prices) By Shashank Nayar and Ambar Warrick Feb 1 (Reuters) - Most Latin American currencies rose on support from strong commodity prices on Tuesday, while the Peruvian sol dropped on renewed political tensions after President Pedro Castillo announced a surprise cabinet shake-up. MSCI's index of Latin American stocks and currencies rose 1.2% and 0.4%, respectively, with the currencies of oil-exporting countries Mexico and Colombia benefiting from strong crude prices. Brazil's real rose 0.5% to a four-month high on support from expectations of higher iron ore demand and rising interest rates. The central bank of Latin America's largest economy is set to further raise rates by 150 basis points to 10.25% in its policy decision on Wednesday. Peru's sol dropped 0.9% as Castillo's cabinet shuffle included his moderate prime minister pick, which sowed doubts over whether his investor-friendly finance minister would continue in the post. The move has renewed concerns over the possibility of disruptive economic policies in the country, after a tumultuous presidential election and an impeachment attempt last year. Easing concerns over extreme left-leaning policies had helped the sol appreciate in January. The Chilean peso dipped 0.3% as the country's December economic activity fell short of market expectations. But a rise in copper prices helped limit losses. Latin American assets have had a positive start to the year with most currencies ending January higher as central banks in the region have pushed ahead with aggressive rate hikes since last year to curb inflationary pressures. The Mexican peso rose 0.2% to a one-week high after lagging most of its regional peers in January. With data showing Mexico's economy entered a technical recession in the last quarter of 2021, analysts expect further interest rate hikes in the country to be more gradual. "While the inflation data and the hawkish-sounding Banxico minutes of the December meeting point towards the central bank delivering another large 50bp rate step at its meeting in early February the weak growth outlook might cause it to take more gradual steps," said Elisabeth Andreae, an analyst at Commerzbank. In Argentina, a prominent lawmaker broke ranks with the country's ruling party on Monday, rejecting a $44.5 billion agreement struck in principle with the International Monetary Fund late last week, a sign of cracks in the ruling coalition. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1213.42 0.43 MSCI LatAm 2312.70 1.21 Brazil Bovespa 112950.05 0.72 Mexico IPC 51552.39 0.43 Chile IPSA 4596.15 1.05 Argentina MerVal 91662.46 0.83 Colombia COLCAP 1544.56 0.5 Currencies Latest Daily % change Brazil real 5.2765 0.53 Mexico peso 20.5883 0.18 Chile peso 802.12 -0.28 Colombia peso 3919 0.57 Peru sol 3.8719 -0.91 Argentina peso 105.1100 -0.09 (interbank) (Reporting by Shashank Nayar in Bengaluru; Editing by Marguerita Choy and Andrea Ricci)