EMERGING MARKETS-Latam stocks slide on tariff concerns; Colombia policy decision awaited

By Johann M Cherian

March 31 (Reuters) - Latin American stocks took a hit and currencies were little changed on Monday as investors weighed the repercussions of extensive U.S. tariffs and awaited an interest rate decision by Colombia's central bank.

Over the weekend, U.S. President Donald Trump said reciprocal tariffs he is set to announce this week will include all nations, adding to concerns that the protectionist policies could spark inflation, dent demand and weaken global economic growth.

His remarks were in contrast to previous hints he had made regarding flexibility of the policies, which further spread uncertainty among investors.

MSCI's gauge for regional stocks .MILA00000PUS fell 0.8% to a two-week low, while a currencies index .MILA00000CUS edged up 0.3% against the dollar.

Still, the indices are on track for gains both on a monthly and quarterly basis, helped by advances earlier in the month as traders looked for bargains outside of the United States.

Brokerage HSBC said a majority of respondents to its emerging markets sentiment survey still have a positive bias on the asset class.

On the day, Colombian equities .COLCAP lost 1.2%, while the local peso COP= firmed 0.2% ahead of a monetary policy decision by the local central bank. Analysts polled by Reuters expect a 25 basis-point reduction in borrowing costs.

"Were it not for the fiscal developments since the last meeting, the case for cutting cautiously given the disinflation trend outlook would be more compelling," Goldman Sachs analysts said in a note.

Colombia's Colcap index is poised for its largest quarterly jump since the fourth quarter of 2020.

Mexico's peso MXN= weakened 0.3% and stocks .MXX slid 1.4% as ratings agency Moody's said U.S. tariffs are likely to hit the region's second-largest economy the most, along with Thailand and Malaysia.

Brazil's real BRL= firmed 0.3% and is on track for its biggest three-month rise since the first quarter of 2022. Analysts have said the region's largest economy is among the least susceptible to risks in the event of a global trade war with the U.S.

The Bovespa index .BVSP lost 0.9%. The monetary policy director of the country's central bank said policymakers "strongly believe" that long-term unanchored inflation expectations are due to concerns over potential fiscal surprises.

Copper exporter Chile's peso CLP= lost 0.5% as prices of the red metal hit a two-week low. Local equities .SPIPSA declined 0.7% as data showed the country's copper output fell in February and a separate report indicated a decline in manufacturing production during the month.

Argentina's Merval index .MERV lost 2.4%, and traders said the JPMorgan index that reflects investors' confidence about the country's sovereign debt rose by 66 units to its highest level since November 2024.

The country's stock index has dropped more than 8% this quarter as investors await highly anticipated capital reforms and a fresh International Monetary Fund loan.

The debt-ridden country is seeking a first disbursement of more than 40% under a $20 billion IMF program, citing improved economic fundamentals. First disbursements were usually between 20% and 30%.

Key Latin American stock indexes and currencies at 14:30 GMT: