EMERGING MARKETS-Latam assets inch up as Trump seeks to soften auto tariffs

By Pranav Kashyap

April 29 (Reuters) - Latin American markets were cautiously trading higher on Tuesday as investors weighed the implications of the White House's plans to soften the impact of auto tariffs, while attention was also on a series of central bank meetings.

An index tracking Latin American currencies .MILA00000CUS edged up 0.2%, although Mexico's peso MXN= traded lower by 0.13% against the U.S. dollar.

Mexico's benchmark index .MXX inched 0.23% higher, reflecting the country's significant role as a major supplier of automotive products to the United States.

In a bid to ease the burden of automotive tariffs, President Donald Trump's administration announced plans to lessen duties on foreign parts used in domestically manufactured vehicles. This move aims to prevent additional tariffs on imported cars from exacerbating the existing ones, according to officials.

Adding to the positive sentiment, a report said that China had lifted the 125% tariff on ethane imports from the United States, which had been imposed earlier this month. This hints at a possible easing of the trade tensions between the two economic giants.

The Chilean peso CLP= was down 0.5% ahead of its central bank's interest rate decision, with expectations that the rate will remain steady at 5%.

Conversely, Peruvian stocks .SPBLPGPT slipped by 0.2%during the day. Data from Peru indicated that its unemployment rate rose to 8.7% for the quarter ending in March, up from 8.4% in the previous period.

"In terms of trade policies, Chile and other countries in the region are very much linked to the Chinese economic cycle and that means that until this trade tussle between U.S and China is not resolved, the central banks will have to be more cautious than initially expected," Pantheon Macroeconomics' chief Latin America economist, Andres Abadia said.

A gauge for the region's stocks .MILA00000PUS rose 0.63%.

In Brazil, stocks .BVSP edged up by 0.4%, while the real BRL= strengthened by 0.14%. The central bank there has noted a significant drop in profitability among non-financial companies, a consequence of its aggressive monetary tightening.

The Selic rate has been hiked by 375 basis points to 14.25%, with further increases signaled for May, as the bank strives to rein in annual inflation, which stood at 5.49% in mid-April, surpassing the 3% target.

Colombia's peso COP= rose 0.3%, while the country's benchmark stock index .COLCAP was flat, with a central bank interest rate decision looming on Wednesday. A Reuters poll suggests the bank will likely keep rates unchanged, as inflation remains above target levels.

Attention was also drawn to the ongoing assembly of foreign ministers from the BRICS nations, as they strategize their response to the wave of new tariffs from U.S. President Donald Trump.

Elsewhere, Hungary's central bank indicated that its interest rate might remain at 6.5% for an extended period, as tariffs heighten risks to both economic growth and inflation, while increasing market volatility.

Key Latin American stock indexes and currencies: