EMERGING MARKETS-Latam stocks, currencies soar after Trump temporarily lowers tariffs for most countries

By Johann M Cherian and Lisa Pauline Mattackal

April 9 (Reuters) - Latin American stocks and currencies leapt on Wednesday, reversing sharp declines after U.S. President Donald Trump's announcement that he would temporarily lower new tariffs on many countries provided some relief to markets battered by worries about how his trade policies would hit economic growth.

Trump said he would temporarily lower new tariffs less than 24 hours after they went into effect, though he further hiked levies on Chinese imports to 125% from 104%. He also suspended targeted tariffs on other countries for 90 days to allow time for negotiations.

An index of Latin American currencies jumped 1.8% .MILA00000CUS, while an index of regional equities .MILA00000PUS soared 6%, its biggest one-day gain since October 2022.

Before the announcement, global markets had seen a steep selloff in both stocks and safe-haven government bonds throughout the day. MKTS/GLOB

"We didn't even have a whole day of reciprocal tariffs before they got rolled back...this is the disciplining effect of financial markets in evidence today," said Shaun Osborne, Chief FX Strategist, Scotiabank.

The news was a welcome relief for markets, which have been roiled by a constant back and forth on U.S. tariff policy and retaliatory actions by other countries, though uncertainty, particularly about the impact of tariffs on China, remained.

An index of global emerging market stocks .MSCIEF has dropped over 10% since Trump's initial "Liberation Day" reciprocal tariff announcement.

The latest announcement comes after Beijing retaliated with sharp levies against the U.S. earlier in the day.

"Tariffs haven't gone away - we've still got two global trade heavyweights (the U.S. and China) slugging it out in the middle of the ring," said Osborne.

Most emerging market sovereign dollar bonds remained broadly lower across the board, particularly those from smaller and riskier issuers, which has raised concerns about their governments' ability to borrow money in the future.

The White House said a 10% blanket duty on almost all U.S. imports will remain in place, and it appears that Trump's announcement would not affect existing duties on autos, steel and aluminum.

Mexico's peso MXN= jumped 2.9%, rebounding from a slump it hit earlier in the session as it fell under the psychological mark of 21 to the dollar. Chile's peso CLP= jumped 1.9%, while Colombia's peso COP= and Brazil's real BRBY leapt nearly 3% each.

Stock markets across the region rose broadly.

Argentina's Merval index .MERV soared 9.7% in its best day since November 2023, also lifted after the International Monetary Fund was set to approve a $20 billion loan deal with the country on Friday, its government said.

A White House official also said the 25% tariffs on Canadian and Mexican imports not covered by existing free trade agreements remained in effect.

Data showed Mexico's annual inflation in March remained within the central bank's target range.

Further on the data front, Brazil retail sales rose 0.5% on a monthly basis in February.

Key Latin American stock indexes and currencies at 2010 GMT: