EMERGING MARKETS-Latin American assets up on easing trade war jitters; focus on Trump's Gulf tour

By Nikhil Sharma, Johann M Cherian

May 13 (Reuters) - Most Latin American currencies rose on Tuesday, tracking higher commodity prices on a temporary reprieve in trade tensions between U.S. and China, while U.S. President Donald Trump's tour of the Gulf region was keenly monitored by investors.

MSCI's index for regional currencies .MILA00000CUS jumped 1.1% to near a one-year high against the dollar. The greenback USD= eased following strong gains on Monday and after U.S. data on Tuesday signaled inflation rose moderately in April.

Global financial markets started the week on a firm note after the U.S. and China reached an agreement to temporarily de-escalate trade tensions that analysts feared could trigger a world-wide recession.

On Tuesday, the White House said it will cut the "de minimis" tariff for low-value items imported from China.

"There's a lot of optimism on the prospect of trade deals with the U.S., specifically U.S.-China, which is the most important trade deal," said Jon Harrison, managing director of EM Macro Strategy.

"So it seems the U.S. administration has made progress that is increasing optimism generally in emerging markets and the Latam (region)."

However, uncertainty on the trade front remains because the U.S.-China breakthrough still keeps overall duties at a higher level than they were in late 2024.

Brazil's real BRL= jumped 1%, tracking higher iron ore prices - a top export commodity out of Latin America's largest economy, while minutes from the latest meeting of the country's central bank's showed policymakers were erring on the side of keeping borrowing costs elevated for an extended period.

The currencies of oil exporters Mexico MXN= and Colombia COP= rose 0.8% and 0.3% respectively, tracking higher crude prices.

U.S. crude oil futures climbed more than $1 a barrel as U.S. Trump secured a $600 billion investment from Saudi Arabia during his tour in the Gulf region, which included a defence sales agreement worth nearly $142 billion.

The riyal SAR= was flat, while the Saudi Arabian stock index .TASI closed higher by 0.4%.

Meanwhile, the currencies of copper producers Chile CLP= and Peru PEN= edged higher by 0.8% and 0.4%, respectively.

Traders also were monitoring a Community of Latin American and Caribbean States' (CELAC) forum, where China's President Xi Jinping vowed to disburse 66 billion yuan ($9.18 billion) in credit to boost China's footprint in Latin America.

COMMODITIES-LINKED STOCKS RISE

On the equities front, an index tracking regional stocks .MILA00000PUS jumped 2%, with Brazil's Bovespa .BVSP up 1.3%.

Shares of Petrobras PETR4.SA were little changed after the Brazilian state-run oil company posted a higher quarterly net profit, helped by one-off items, and announced about $2.1 billion in dividends.

Other commodity-linked companies in the region such as Brazil's Vale VALE3.SA, Colombia's Ecopetrol ECO.CN and Argentina's YPF YPFDm.BA saw their shares go higher.

Argentine bonds were steady and the peso ARS=RASL rose 0.8%. Fitch upgraded the country's long-term foreign-currency and local-currency issuer default rating to "CCC+" from "CCC".

The deputy governor of Argentina's central bank said he expected a slowdown in prices in April to continue in May.

Elsewhere, India's rupee INR= was down 0.4%. Data showed retail inflation slowed in April, opening up room for more interest rate cuts by the country's central bank.

South Africa's rand ZAR= dipped 0.4%. Data showed the unemployment rate jumped in the first quarter of this year, signaling that some people appear to have given up looking for work.