EMERGING MARKETS-LatAm assets buck global dip on valuation fears; Brazil's rate call in spotlight

By Pranav Kashyap

Nov 5 (Reuters) - Most Latin American currencies and stocks rose on Wednesday, bucking a fresh bout of global valuation jitters that kept global risk assets in check, while investors turned their gaze to Brazil ahead of a key rate decision.

The real BRL= recovered from a near two-week low, rising by 0.5%, while stocks in Sao Paulo .BVSP climbed to a fresh record high, and were on pace to log their 11th consecutive day of gains - the longest since July 2024.

The central bank is widely expected to hold the Selic rate at 15% - a near two-decade high, keeping pressure on stubborn inflation that is still overshooting its 3% target.

A towering yield gap over the U.S. Federal Reserve's 3.75%-4% target range has supercharged carry trades and foreign inflows, helping the real, which is up 15% year-to-date.

But with growth showing signs of cooling, investors will dissect the central bank's statement for hints of when cuts might finally come - potentially not until 2026 - and how vulnerable the currency remains to shifts in U.S. policy and risk appetite.

"Despite the recent slowdown in economic activity, the bank is likely to emphasize persistent inflation pressures and a still-tight labour market, signalling that rate cuts are not imminent," said Kenneth Broux, head of corporate research FX and rates at Societe Generale.

"This cautious approach and attractive carry should in theory keep the real anchored around 5.40 reais per dollar."

Latin American assets are riding a wave of global portfolio rebalancing this year, as investors pivot away from U.S. markets in search of higher yields and calmer political waters.

Countries like Brazil and Chile have emerged as favorites - not just for their attractive interest rates, but for offering a relatively quieter political backdrop and more predictable macro environments.

Overnight, Wall Street's top banks sounded the alarm on a potential equity market correction, citing stretched valuations. The CEOs of Morgan Stanley MS.N and Goldman Sachs GS.N stoked fears of a looming bubble that triggered a sell-off from Seoul to Saudi Arabia.

An index tracking the region's equities .MILA00000PUS rose 0.88%, while a similar gauge for currencies .MILA00000CUS ticked up 0.1%.

The Mexican peso MXN= gained 0.2%, while equities .MXX were flat.

Unlike Brazil, Mexico's central bank is primed to cut on Thursday, as Banxico looks to jump‑start an economy that could have shrunk in the third quarter.

Recent data showed headline inflation cooled more than expected in mid‑October, but a sticky core still sits above the 3% target. A poll showed Mexico's headline inflation is expected to ease in October - further adding to bets for a rate cut.

Chile heads into a pivotal vote in less than two weeks, with ruling‑coalition contender Jeannette Jara leading ahead of the November 16 first round, a recent poll suggests.

Even so, political stability has underpinned a blistering equity run, with the benchmark equity index .SPIPSA nearly up 40% year-to-date.

Meanwhile, Peru's President Jose Jeri told a business forum late on Tuesday he expected the Andean nation's economy to expand 3.5% in 2025, up from the 3.3% registered last year, and pledged to hand over orderly public finances to the next government in 2026.

Stocks in Lima .MXNUAMPESCPGPE were steady while the sol PEN= rose 0.17% in light volumes.

Qatari Diar is set to partner on a $29.7 billion Mediterranean mega‑project in Egypt, a Reuters report said - news that flipped the country's sovereign bonds into the green, with the 2050s up to 94 cents on the dollar.

Back in Latin America, Argentine stocks .MERV continued hover at record levels, while Colombia's .COLCAP hit a fresh peak.

Key Latin American stock indexes and currencies: