EMERGING MARKETS-Latam markets recover ground; peso gains after Banxico minutes

By Purvi Agarwal

Feb 20 (Reuters) - Most Latin American currencies were higher on Thursday as the dollar retreated after two sessions of gains, while investors assessed U.S. President Donald Trump's new tariff threats and setbacks in talks to solve the Russia-Ukraine conflict.

Markets bounced back after logging losses in the previous session on minutes of the U.S. Federal Reserve's meeting that showed policymakers were concerned that Trump's initial policy proposals would lift inflation, implying interest rates could remain higher for longer.

On the day, the Chilean peso CLP= was up 0.7%, set to snap three sessions of losses, also helped by higher copper prices. Peru's sol PEN= gained 0.3%.

The Brazilian real BRL= strengthened 0.4%, while Colombia's peso COL= climbed 0.6%.

"What we are seeing is perhaps some sort of adjustment of the volatile period that we saw in previous weeks," said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics.

MSCI's index tracking Latam currencies .MILA00000CUS was little changed, while the stocks index .MILA00000PUS was 0.5% higher.

Mexico's peso MXN= appreciated 0.3%. The Bank of Mexico said that it might continue cutting the benchmark interest rate and could "consider adjusting it in similar magnitudes" to the latest 50 basis points reduction.

Early jitters around Trump's tariffs, when he added lumber to his exhaustive list, receded somewhat but the end of his 30-day reprieve for Mexico and Canada loomed large.

"The start of next month when apparently the tariffs on Mexico will start to be imposed, that's going to be when we will probably see more uncertainty than downside forces," said Abadia.

"But the good news for is that we have a relatively attractive carry in most of the Latam currencies. That is going to perhaps prevent a sharp deterioration."

Mexico, Thailand, and Malaysia face the highest risk due to tariff gaps and U.S. trade reliance, according to the Institute of International Finance.

Equity indexes in the region were mixed, with ones in Argentina .MERV down 1.4% and Chile .SPIPSA gaining 0.7%.

Brazil's .BVSP was up 0.4%, boosted by a 4.3% gain in miner Vale VALE3.SA despite posting a quarterly loss.

Colombia's COLCAP .COLCAP added 2.2% to continue trading at levels last seen in April 2022.

Meanwhile, Argentine President Javier Milei will likely discuss the recent tariff hikes on U.S. imports of steel and aluminum in an upcoming visit to Washington.

Blockchain researchers said that around $99 million worth of cryptocurrency was withdrawn from the marketplace of a coin that was promoted by Milei late on February 14 only to crash soon afterwards.

Markets also kept an eye on developments in the Russia-Ukraine peace talks, after Trump denounced the Ukrainian president as a 'dictator', deepening the feud between the leaders.

Ukraine's GDP warrant fell by nearly 3 cents, the most since August 2023, while bonds traded down nearly 3.5 cents, the most since they were restructured late last year, before paring.

Highlights:

Netflix to invest $1 billion in Mexico over the next 4 years

Investors worries over Ukraine ceasefire rise, sending debt tumbling

Nigeria's central bank keeps main interest rate unchanged

Key Latin American stock indexes and currencies at 1530 GMT: