EMERGING MARKETS-Latam FX, stocks resilient in face of Trump's new tariffs

By Purvi Agarwal

Feb 11 (Reuters) - Latin American currencies and stocks were higher on Tuesday as markets awaited more clarity on U.S. President Donald Trump's latest tariffs, while assessing economic data out of Brazil.

Trump raised tariffs on steel and aluminum imports to a flat 25% and eliminated country exceptions, quota deals and product-specific exclusions, a move that drew condemnation from Canada, the EU and Mexico.

Currencies in Brazil BRL= and Mexico MXN=, among the biggest suppliers of steel to the United States, were up 0.3% and 0.2% respectively.

Brazil's Bovespa .BVSP was up 0.6%, despite a 1.2% fall in steel heavyweight Vale VALE3.SA, while Mexican stocks .MXX were weighed down by a 3% fall in miner Grupo Mexico GMEXICOB.MX.

Trump's plans for reciprocal tariffs in the next two days made investors cautious and they pulled away from certain EM assets.

MSCI's index tracking Latin American currencies .MILA00000CUS was up 0.2%. The stocks gauge .MILA00000PUS was flat.

"There's not much of a reaction from the market, perhaps because there will continue to be unpredictability around Trump policies," said analysts at LMAX Group, pointing to the exception being considered for Australia.

They added that Trump's policies so far had not been as disruptive as initially feared.

Separately, data showed Brazil's inflation rate slowed in January, but the 12-month rate was still above the upper end of the central bank's target range, keeping expectations intact for another rate rise next month.

The Chilean peso CLP= gained 0.3% but stocks on its S&P provided index .SPIPSA were off 0.2%.

Recent polls and political analysts point to a shift back to traditional moderate conservatism ahead of a presidential election in November, that has helped the stock market in the world's largest copper producer to record highs.

Heavily influenced by oil exports, Colombia's peso COP= fell 0.4%, while its stocks .COLCAP gained 0.4%.

Dollar bonds in Ecuador broadly recovered over 1 cent each, after logging sharp losses on Monday as the first round of voting did not yield a winning presidential candidate, dragging the election to a second voting round.

"Other than keeping uncertainty high, the wait could impact fundamentals too. It could leave fiscals looser or delay potential funding until the election uncertainty has cleared," analysts at Morgan Stanley said.

They said Ecuador's bonds hold value and look cheap compared to peers.

Analysts at BofA Global Research said that LatAm markets outperformed other emerging markets in January 2025, attracting inflows from foreigners, despite broader EM funds seeing outflows.

Investors also kept an eye out for sovereign bonds in Egypt and Jordan, that fell nearly 1 cent each, after Trump said he might withhold aid to the countries if they did not resettle Palestinians from Gaza.

There was little reaction to Federal Reserve Chair Jerome Powell's testimony, in which he repeated that the central bank was not in a rush to cut interest rates again.

Highlights:

China builds space alliances in Africa as Trump cuts foreign aid

Turkey lifts Syria trade and transit restrictions in bid to boost trade

Key Latin American stock indexes and currencies: