EMERGING MARKETS-Latam FX, stocks mixed as investors brace for new Trump tariffs; Middle East eyed

Updates to mid-session trading

By Purvi Agarwal and Johann M Cherian

Feb 10 (Reuters) - Risk sentiment was fragile in Latin America on Monday, as investors weighed the implications of U.S. President Donald Trump's latest threats on global trade and monitored geopolitical developments in the Middle East.

Trump is expected to announce 25% tariffs on all steel and aluminum imports into the U.S. on Monday or Tuesday, according to a source, and will potentially unveil further a set of reciprocal tariffs on top trade partners later in the week.

The latest threats follow Trump ordering tariffs on Mexican and Canadian goods on February 1, before giving both countries a one-month reprieve after negotiations.

Steel exporter Mexico's peso MXN= dipped 0.2% on Monday, while local stocks .MXX were up 0.6%.

Metals exporter Brazil's real BRL= firmed 0.3%, while its Bovespa index .BVSP added 0.8%. Steelmaker Gerdau GGBR4.SA, which has units in the U.S., rose 5.8% after the tariff news.

Officials from both Latin American economies said that they will wait to see whether the U.S. President announces the import duties before reacting.

With each Trump announcement, markets have braced for possible volatility on concerns over potential retaliatory measures and an increasingly uncertain outlook for emerging market assets.

When asked on investing strategies against a volatile backdrop, Eduardo Ordonez Bueso, an emerging markets debt portfolio manager at BankInvest said, "in the countries or companies or sectors where we believe there is more risk of a headline coming, we are normally 'neutral' or 'underweight', or you can just outright add more if it's a country or a jurisdiction or sector where you think he won't be (targeting again) too quickly."

More broadly, MSCI's index tracking regional currencies .MILA00000CUS was off 0.3%, while the stocks gauge .MILA00000PUS was 0.5% higher, after logging five consecutive weeks of gains on Friday.

Ecuador's government bonds plunged as they resumed trading, with the country now facing two months of uncertainty after its presidential election failed to produce a winner in the first round of voting between incumbent Daniel Noboa and leftist Luisa Gonzalez.

The country's dollar-denominated bonds expiring in 2030 XS2214237807=TE, 2035 XS2214238441=TE and 2040 XS2214239175=TE fell between 5 and 10 cents on the dollar.

"A series of blackouts in recent weeks, and still some degree of violence in different areas (has been hurting Noboa). He's still in the lead and maybe markets will reconsider in the next few days, but maybe not as much as before, considering that the second round won't be as easy as they thought it would be," Bueso added.

In the Middle East, Palestinian militant group Hamas announced it would stop releasing Israeli hostages until further notice over what it said were Israeli violations of the ceasefire agreement announced about a month ago. Egyptian security sources feared the agreement's breakup.

Israeli dollar bonds 46513JXN6= were last down 0.2 cents on the dollar, while the shekel ILS= dropped 0.6%.

Credit rating agency Moody's warned that the triple-A ratings of top multilateral lenders such as the World Bank would be at risk if the U.S. withdrew support for them.

Elsewhere, currencies of copper exporters Chile CLP= and Peru PEN= added about 0.1% each tracking higher prices of the red metal.

Oil exporter Colombia's peso COP= dipped 0.5%, while its stocks .COLCAP were up 0.6%. Its Finance Ministry said on Friday that Colombia had met its fiscal rule in 2024 despite its fiscal deficit landing well above target and the government trimming its economic growth forecast.

Key Latin American stock indexes and currencies at 1942 GMT: