EMERGING MARKETS-Latin American stocks rebound, currencies steady after recent selloff

By Johann M Cherian

April 8 (Reuters) - Most Latin American stocks rose and currencies were stabilizing after early declines on Tuesday, but investors' mood remained brittle as they looked for any hints of a reprieve to an ongoing growth-denting global trade war.

MSCI's gauge for regional stocks .MILA00000PUS rose 1.6%, while an index tracking currencies .MILA00000CUS was flat against a weaker dollar. The indexes had logged declines in the previous two sessions.

Latin American assets were spared from the worst of the selloff that had gripped global markets since late last week as some of the lowest U.S. import tariffs were imposed on the major economies in the region.

"Except Mexico and parts of Central America, most of the (Latin American) countries do not have a big exposure to trade with the U.S.," said Eduardo Ordonez Bueso, an emerging markets debt portfolio manager at BankInvest.

"So for once, it's one of the arguments for emerging markets funds to rearrange towards the region, if you're looking for a more defensive block in this context."

However, uncertainty prevailed after Brazil was readying a response to the tariffs announced by U.S. President Donald Trump while Mexico did not completely rule out a possibility of retaliatory tariffs. The possible escalation of a trade scuffle between the U.S. and China also kept investors on edge.

Investors, however, took some comfort from signs that the leaders of Japan, Indonesia, Vietnam, Israel and other countries were willing to negotiate with the U.S.

Brazil's real BRL= edged up 0.4% as investors assessed data that showed public sector gross debt rose to 76.2% of gross domestic product in February from the previous month, driven by the country's heavy interest burden.

The central government's primary deficit stood at 0.12% of economic output last month, compared with the official target of a zero primary deficit this year.

The Bovespa equities index .BVSP added 0.9%, with oil giant Petrobras PETR4.SA and miner Vale VALE3.SA up 1% and 0.3%, respectively.

Brazilian assets have outperformed regional peers this year on expectations that Latin America's largest economy is less exposed to U.S. trade, combined with the possibility that its agricultural products could find a burgeoning market in China.

A rebound in prices of commodities such as crude oil and copper on Tuesday further helped assets in the resource-rich region.

Mexico's peso MXN= gained 0.6%, further aided by higher crude prices, while the country's main stocks index .MXX added 1.2%.

A report said that the region's second-largest economy was speaking to private sector companies about increasing fracking to reduce Mexico's reliance on U.S. gas.

The currency of copper exporter Chile CLP= edged up 0.4%. Investors assessed data that showed inflation rose in line with economists' expectations in March, helped by the higher cost of food and non-alcoholic beverages as well as education.

Colombia's peso COP= appreciated 0.9%, tracking higher crude prices, while the COLCAP equities index .COLCAP added 0.3%.

Markets also assessed data that showed Colombia's inflation rose less than expected in March, at a time when investors have been concerned about the country's increase in government spending.

Argentina's Merval equities index .MERV was up 4.8%.

Markets are also watching for developments around a potential end to the Russian-Ukraine war. Kyiv's hard-currency bonds XS2895057334=TE, XS2895057177=TE and GDP warrants XS1303929894=TE advanced more than 3 cents on the dollar.

Goldman Sachs said bond pricing inferred that markets believed there was a 70% probability of a Ukraine peace deal, up sharply from before the November 5 election of Trump.

Key Latin American stock indexes and currencies at 1416 GMT: