EMERGING MARKETS-Latam currencies trade in a tight range as markets brace for US tariffs

By Johann M Cherian

April 1 (Reuters) - Investor mood across Latin America was fragile on Tuesday, with major currencies in the region trading in a tight range as investors awaited reciprocal trade barriers that U.S. President Donald Trump is due to announce.

A report said White House aides have drafted plans for tariffs of about 20% on most of the $3 trillion of goods imported annually to the U.S., a move that is likely to hurt trade-reliant developing economies and escalate a global trade war.

The plan is likely to be rolled out on Wednesday evening.

An index tracking Latam currencies .MILA00000CUS was flat against the dollar and investors flocked to safe-haven currencies such as the Japanese yen JPY=.

Mexico's peso MXN= hovered at 20.4 to the dollar, while the local stock index .MXX edged up 0.2%.

The second one-month pause to U.S. tariffs on Mexican and Canadian imports in compliance with existing free trade rules is also likely to expire later this week.

However, a Reuters poll showed analysts expect the peso to trade relatively stable in coming months on expectations that any new U.S. tariffs on Mexican products would be limited in scope and short-lived and that the two governments would eventually reach middle ground.

"The reciprocal and products tariffs will likely prompt varied responses across different countries, ranging from immediate retaliation to diplomatic negotiations," analysts at UBS said in a note.

"North America, particularly Canada and Mexico, may adopt a more diplomatic approach."

Brazil's real BRL= dipped 0.1% but has outperformed regional peers so far into the year with analysts pointing to the economy being less exposed to trade with the United States.

Data from JP Morgan also showed that the country's dollar bonds have seen the biggest gains so far in the year, among major emerging markets.

Chile's peso CLP= edged up 0.2%, but gains were limited as investors assessed data that showed economic activity unexpectedly fell in February as the world's largest copper exporter grappled with a major power outage last month.

Fellow copper producer Peru's sol PEN= was flat, while Colombia's peso COP= firmed 0.5%.

On the equities front, MSCI's gauge for regional equities .MILA00000PUS rose 0.8%, aided by a 0.5% gain in Brazil's Bovespa index .BVSP.

Index heavy-weights Petrobras PETR4.SA and Vale VALE3.SA added 0.7% and 1.3%, respectively.

Colombia's Colcap index .COLCAP edged up 0.1%, while the equity benchmarks in Chile .SPIPSA added 0.2%.

Argentina's Merval index .MERV slipped 0.1%. Investors awaited any hints about a potential trade deal between the two economies when the country's foreign minister Gerardo Werthein meets his U.S. counterpart Marco Rubio on Tuesday.

Despite signs of progress on a new $20 billion International Monetary Fund program, the Merval index has underperformed peers in the region as investors awaited clarity on what might happen to the strict capital controls that have been in place since 2019.

Key Latin American stock indexes and currencies at 1435 GMT: