EMERGING MARKETS-Latam currency index leaps to eight-month high as risk-off mood eases

By Lisa Pauline Mattackal, Shashwat Chauhan and Purvi Agarwal

March 14 (Reuters) - Latin American stocks and currencies saw robust gains on Friday, helped by rising commodity prices and as investors took a breather from a barrage of U.S. tariff policy headlines.

MSCI's index for Latin American currencies .MILA00000CUS was up 0.9%, trading near levels last seen in July, eyeing slight gains for the week.

"The postponement of U.S. tariffs until 2 April and favorable political dynamics are generating a constructive environment for LatAm FX," analysts at Societe Generale wrote, adding they were "constructive" on Latam currencies.

The Mexican peso MXN=, among the most sensitive currencies to U.S. tariffs, rose 0.8%. U.S. Secretary of State Marco Rubio said late Thursday that cooperation with Mexican authorities has improved, but work still needs to be done on curtailing the flow of illegal drugs.

The real => jumped 1% after data showed Brazil's debt to GDP ratio fell unexpectedly in January. However, retail sales slipped for a third consecutive month in January.

Despite the signs of a slowdown, Brazil's central bank is expected to hike rates to a near decade high at its meeting next week to combat inflation.

"Our sense is that there's just about enough weakness in the economy to tip Copom towards ending the tightening cycle next week... but the inflation challenge means there’s a very plausible scenario where they flag one or two more hikes, albeit of a smaller magnitude," said William Jackson, chief EM economist at Capital Economics.

Oil prices rose, and gold jumped past the $3,000 per ounce level for the first time, also aiding currencies and stocks. GOL/ O/R

Miner Vale VALE3.SA gained 3.2%. Brazil's Petrobras PETR3.SA and Colombia's Ecopetrol ECO.CN rose 4.4% and 3.5%, respectively.

Argentina's Merval .MERV leapt 4.5%, while Brazil's Bovespa .BVSP was up 2.7%.

MSCI's gauge of regional stocks .MILA00000PUS jumped 3.5%, set for its best day November 2023. The index saw steep losses earlier as markets were hit by an escalating global tariff war and concerns about slowing U.S. and global growth.

Despite volatility, the Latin American stocks index has gained nearly 13% this year, sharply outperforming the U.S. benchmark index .SPX which has lost 4.4%.

Peru's sol PEN= rose 0.3% after the central bank on Thursday held its benchmark interest rate at 4.75%, as expected.

Elsewhere, Trump said there is a "very good chance" the war between Russia and Ukraine can end after "productive" discussions with Russian President Vladimir Putin.

That optimism helped lift stocks in Central and Eastern Europe, which were further boosted after German political parties reached an agreement on a key debt deal.

Prices of Ukraine dollar bonds rose.

Data showed Argentina's monthly inflation rate accelerated to 2.4% in February, in line with analyst estimates.

HIGHLIGHTS

Donald Trump makes Chinese stocks (somewhat) great again

Shares in Brazil's Natura &Co dive more than 25% after quarterly results

*Peru central bank sees strong economic growth, limited tariff blow

Key Latin American stock indexes and currencies at 2007 GMT: