EMERGING MARKETS-Latam stocks, FX eye weekly gains; Turkey in focus

By Pranav Kashyap, Johann M Cherian and Shashwat Chauhan

April 17 (Reuters) - Most Latin American stocks and currencies were set for weekly gains on Thursday, as investors closely monitored trade negotiations in Washington, while Turkey was in focus among emerging markets after its central bank's unexpected rate hike.

MSCI's Latam stocks gauge .MILA00000PUS advanced 1.6%, whereas the currency index .MILA00000CUS gained 1.4% against the dollar.

Both indexes were on track for weekly gains, marking the stock index's first ascent in four weeks and the currency index's first in five, as investor sentiment steadied after President Donald Trump temporarily suspended steep tariffs impacting global economies last week.

Markets were also monitoring negotiations between Japan and the United States that Trump lauded as productive, while Italian Prime Minister Giorgia Meloni was also headed to the White House for a meeting.

However, a fierce tariff-impasse between China and Washington prevailed that analysts have said could dent demand globally, especially for commodities such as industrial metals and crude oil - key sources of export revenue for Latin American economies.

"The global trading system has been drastically altered by Liberation Day turmoil and U.S.-China tariff dispute, dealing a significant demand shock to EM," Citi analysts said.

"Global risk appetite may be dampened for longer notwithstanding a tariff pause."

Mexico's peso MXN= firmed 1% to its highest in six months after Trump said he had a "very productive" conversation with Mexican President Claudia Sheinbaum.

The country's assets outperformed regional counterparts on a monthly basis so far in April, with analysts attributing this to Sheinbaum's steadfast negotiating stance with President Trump, bolstering investor confidence.

Elsewhere, the Turkish lira TRYTOM=D3 rose 0.4% in volatile trading after the central bank's surprise hike of its key interest rate by 350 basis points to 46%, reversing an easing cycle.

"Turkey's technocrats are staying the course on economic policy course correction and, in doing so, are cleaning up the political mess resulting from the 19 March shock arrest of Ekrem Imamoglu," said Tellimer Research analysts said.

The institution's move followed market turbulence sparked by the arrest of Istanbul's mayor last month that weighed on Turkish on worries of political instability. The lira had plunging to a record low at one point, prompting the central bank to step in late March to stabilize the currency.

Back in Latin America, Brazil's real BRL= firmed 1%, while the local Bovespa .BVSP added 1.1%, in a session marked by the expiration of stock options.

The week was also marked by Argentina lifting years-long capital controls that resulted in the peso ARS=RASL witnessing sharp declines before recovering on Wednesday, although President Javier Milei had ruled out any intervention.

Furthermore, the country posted an energy trade surplus of $527 million in March.

Ecuador's leftist presidential challenger Luisa Gonzalez has said she will formally challenge the result of Sunday's election, claiming widespread fraud, although she has lost the support of a key ally party in disputing her defeat.

The country's international bonds XS2214237807=TE, XS2214238441=TE, XS2214239175=TE added more than 1 cent on the dollar having rallied earlier in the week.

Bourses in Peru, Argentina, Colombia and Mexico were closed on Thursday on account of a public holiday.

Key Latin American stock indexes and currencies: