EMERGING MARKETS-Latam currencies head for weekly losses; Argentina-IMF deal in focus

By Johann M Cherian

April 11 (Reuters) - Most Latin American currencies were on track for weekly declines on Friday amid escalating global trade tensions, while investors awaited the signing of an IMF $20 billion loan program for Argentina.

Investor sentiment was fragile across the world after Beijing increased its tariffs on U.S. imports to 125%, in retaliation to U.S. President Donald Trump's latest decision to hike duties on Chinese goods.

Financial markets including stocks, bonds, currencies and commodity prices witnessed huge swings throughout the week after U.S. tariffs on world economies took effect midweek only for its higher tariffs on dozens of countries to be paused for 90 days - except for China, on which Trump instead ramped up the levies.

"Trump doubled down on his hostile stance towards China by increasing the tariff rate even further – which could have knock-on effects on Latin American economies," said Kimberley Sperrfechter, emerging markets economist at Capital Economics.

"Given that Beijing is the most important trading partner for many countries in the region – in particular the commodity producers – weaker growth in China will weigh on these countries too."

Data from BofA research showed emerging market debt saw outflows of about $3.6 billion as of Thursday, while equities saw inflows amounting to $26.7 billion over the past four weeks, with Brazil and China dominating.

Resource-rich Latin American economies have been spared the worst of the turnarounds in U.S. trade policy, however expectations of a slowdown in the global economy has hit prices of commodities - a major source of export income.

Most of the major Latam currencies are on pace for weekly declines, with Colombia's peso COP= on pace to mark its fourth straight week in the red as crude prices trade at about $60/barrel - their lowest since early 2021. The oil exporter's currency was flat on Friday.

On the other hand, Mexico's peso MXN= edged up 0.1% and was on track for a weekly rise of 0.2%. Providing investors some comfort, data showed industrial production rebounded in February, at a time when recent reports have suggested a sluggish economy.

The country had been the focus of Trump's focus early into the year, but has since then softened his stance, as the countries share a free-trade agreement, while analysts have also pointed out that President Claudia Sheinbaum has been actively open to negotiating with her U.S. counterpart.

On Friday, Sheinbaum said the country would immediately send Texas farmers a water delivery as part of a treaty, after Trump threatened tariffs and sanctions since Mexico had fallen short on its water deliveries to the U.S.

Brazil's real BRL= was last down 0.2% in choppy trading and was on track for its third consecutive week in the red.

Traders parsed data that showed inflation rose as economists expected in March, at a time when the local central bank has raised its benchmark interest rate to 14.25% to battle price pressures.

Currencies of copper exporters Chile CLP= and Peru PEN= edged up 0.6% and 0.4%, respectively, tracking a rebound in copper prices. However, they were also poised for weekly losses.

Meanwhile in Argentina, focus was on the signing of a IMF loan, expected later in the day, which analysts expect will bolster the country's depleted foreign exchange reserves and pave the way the long-awaited easing of capital controls.

The Merval stocks index .MERV added 2.8%, while the country's peso was at 1,345 in parallel trade. Contracts tracking the peso have weakened sharply to 1,180 per dollar since earlier in the week when a staff-level agreement at the fund was reached, as investors try to price in the possible outcome of the deal.

Among other bourses in the region, Brazil's Bovespa .BVSP was flat, while Mexican .MXX and Colombian stocks .COLCAP were up marginally higher.

Over the weekend, markets will monitor a tightly contested presidential race in Ecuador. The country's dollar bonds XS2214237807=TE, XS2214239175=TE dropped over 2.3 cents each on the dollar.

Key Latin American stock indexes and currencies at 1455 GMT: