EMERGING MARKETS-Latam FX, stocks close volatile week higher

By Johann M Cherian and Lisa Pauline Mattackal

April 11 (Reuters) - Latin American stocks and currencies were set to end higher on Friday, recovering some ground after a sharply volatile week due to abrupt shifts in U.S. trade policy and escalating tensions with China.

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 have been rattled through the week after U.S. tariffs on world economies took effect, only for Trump to announce a 90-day tariff pause on dozens of countries.

Latin American markets recovered some ground on the day, as hopes increased that individual countries could negotiate more favorable deals with the U.S.

An index of Latin American currencies .MILA00000CUS rose 0.9%, with all major regional currencies rising against a weakening U.S. dollar. An index of regional stocks .MILA00000PUS jumped 2%.

"LatAm will likely benefit from a gradually improving risk environment after President Trump announced a 90-day pause on reciprocal tariffs and on those countries that did not retaliate," Societe Generale analysts said.

However, relief from the tariff pause has been somewhat offset by escalating tensions between the U.S. and China, and continued uncertainty over future policy and the global economic impact.

Most Latin American currencies are set for weekly losses. An index of global EM stocks .MSCIEF has lost 3.5% on a weekly basis, on a week that saw its worst day since the 2008 financial crisis on Monday.

"Given that Beijing is the most important trading partner for many countries in the (Latin America) region ... weaker growth in China will weigh on these countries too," said Kimberley Sperrfechter, emerging markets economist at Capital Economics.

Investors also awaited the signing of an IMF $20 billion loan program for Argentina.

The Merval stocks index .MERV soared 6.8%. Peso futures have weakened sharply to 1,180 per dollar as investors gauge what the IMF deal would mean for the exchange rate regime.

Data showed Argentina's monthly inflation rate came in at 3.7% in March, up from the previous month and a blow to the government's goal of bringing it closer to 1%.

Emerging market sovereign dollar bonds also lost ground on the day, after sharp swings through the week, particularly in debt issued by smaller, riskier emerging markets.

Emerging market debt saw outflows of about $3.6 billion as of Thursday, BofA Research data showed, though equities saw inflows of $26.7 billion over the past four weeks.

Mexico's peso MXN= rose 0.8% and was on track for a weekly rise of 0.7%, outperforming regional peers. Data showed industrial production rebounded in February.

President Claudia Sheinbaum said Mexico 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 inflation rose as economists expected in March.

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.

HIGHLIGHTS

Peru economy to face moderate impact from US tariffs, central bank says

IMF staff-level agreement with Honduras set to unlock around $155 million

Key Latin American stock indexes and currencies at 1950 GMT: