EMERGING MARKETS-Latam stocks, FX fall back after rally as trade uncertainty prevails

By Johann M Cherian and Lisa Pauline Mattackal

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

Trump kept the pressure on China by increasing tariffs on Chinese imports even higher to 145% in response to Beijing's own 84% counter-tariffs, even as he postponed many of his sweeping tariffs on dozens of other countries.

Most Latin American currencies retreated, with the Brazilian real BRBY, Mexican peso MXN= and the Colombian peso COP= falling over 1% each after making some solid gains in the previous session.

The real on Wednesday recorded its biggest one-day rise since October 2022, and Mexico's peso notched its biggest daily gain against the dollar since the COVID pandemic.

Trump's decision to pause some of the tariffs had helped reverse a global selloff that had hit emerging market stocks, bonds and currencies.

But the focus is now on how individual countries would respond and how tariff negotiations with the U.S. would unfold, with Brazil and India among those pursuing discussions.

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

"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."

Concerns about the escalating trade war and continued policy shifts from Trump have roiled markets with uncertainty and hit most emerging market assets over the past weeks.

Emerging market bonds and stocks saw outflows of $17.1 billion dollars in March, the Institute of International Finance (IIF) said, the first time flows turned negative since Trump won the U.S. presidency.

However, tariffs slapped on most Latin American economies have been more lenient than those on other countries, notably those in Asia.

"Latin America is relatively better positioned from a tariff perspective, and there are also active negotiations," said Rohit Chopra, emerging markets equity portfolio manager and analyst at Lazard Asset Management.

Minutes from Mexico's central bank's last rate setting meeting showed policymakers agreed that tariff risks could exert both upward and downward pressures on inflation, as the peso depreciates and the economy weakens.

A 3% slide in crude prices weighed on shares of top oil producers in the region. Brazil's Petrobras PETR4.SA lost 5.9% and Colombia's Ecopetrol ECO.CN dropped 6.5%.

Regional bourses fell between 1.3% and 3.4% on the day.

Some dollar bonds, however, recovered ground on the day with those issued by smaller emerging market countries such as Sri Lanka and Nigeria rallying.

El Salvador's 2035 bond US283875AN23=TE jumped over 4 cents.

An index of Latin American stocks, however, edged up 0.2%, helped by a 1.3% rise in heavyweight Brazilian miner Vale VALE3.SA.

Peru's sol PEN= slipped 0.4% ahead of a central bank monetary policy decision later in the day.

HIGHLIGHTS

Brazil consumer prices forecast to have slowed in March versus February

African credit ratings can absorb aid cuts and trade strains, Fitch says

Argentina renews $5 billion activated swap line with China

Key Latin American stock indexes and currencies at 2000 GMT: