EMERGING MARKETS-Latam markets pause after rally, trade uncertainty prevails

By Johann M Cherian

April 10 (Reuters) - Most Latin American stocks and currencies took a breather on Thursday, after logging sharp gains in the previous session as investors took stock of a high stakes tariff standoff between the two largest economies in the world - the U.S. and China.

Iron exporter Brazil's real BRL= depreciated 1.3% against the dollar after logging a 3.25% jump on Wednesday - its biggest one-day rise since October 2022.

Mexico's peso MXN= weakened 1.2% after notching a 2.7% rise in the previous session - its biggest daily surge since the COVID pandemic. The country's benchmark index .MXX dropped 0.5%.

Investors also awaited minutes from Banxico's March monetary policy meeting at a time when signs of sluggish economic performance have raised expectations that the central bank could hasten its pace of interest rate cuts.

The dollar =USD, often seen as a safe-haven during uncertain economic times, declined 1.5% as investors anticipated the uncertainty to also weigh on the U.S. economy. Traders, instead, flocked to currencies such as the Swiss franc CHF= and the Japanese yen JPY=.

In the previous session, assets across the region rallied after U.S. President Donald Trump paused some of the tariffs he imposed on world economies which had sparked a sweeping bond market rout.

However, he retained baseline duties, along with certain sector-specific surcharges and a 125% levy on Chinese goods.

"All countries seem to just want to know if the United States is willing to negotiate," said Juan Perez director of trading Monex.

"And because there is no clarity on what the ultimate goal to achieve is, there is no consistent guidance or clarity in FX markets and there will not be until there is more stability."

Traders are concerned that Trump's fluctuating trade policies and the ongoing trade war between the U.S. and China could impede business decision making and trigger a global recession.

A slowdown in the world economy is likely to hurt Latin American economies that are dependent on the export revenues of resources such as crude oil and copper, along with agricultural goods. Investors also remain on edge for any signs of a retaliation from Beijing.

A 3% slide in crude prices weighed on shares of top oil producers in the region. Brazil's Petrobras PETR4.SA lost 3.4%, Colombia's Ecopetrol ECO.CN dropped 3.6% and Argentina's YPF YPFDm.BA slid 3.8%.

The stocks weighed on their respective benchmark stock indexes, with Brazil's Bovespa .BVSP down 1%, while Colombia's Colcap .COLCAP and Argentina's Merval index .MERV lost 1.5% and 4%, respectively.

Meanwhile, Argentine bonds maturing in 2035 AR217736439= and 2041 AR217736536= added about 1.7 cents on the dollar.

In a win for President Javier Milei, the International Monetary Fund board is likely to approve a $20 billion loan deal for Argentina on Friday, a government spokesman said.

Pesos of Chile CLP= and Colombia COP= slipped 0.7% and 1.3%, while Peru's sol PEN= depreciated 0.4% ahead of a central bank monetary policy decision.

In a minor relief for markets, Fitch Ratings said pressure from recent U.S. aid freezes and global trade tension is unlikely to result in wide scale credit downgrades in Africa.

However, given the continent's vast resources the ratings agency added that it could become a playing field for U.S.-China tensions.

Key Latin American stock indexes and currencies at 1447 GMT: