EMERGING MARKETS-Latam assets steady after Trump postpones EU tariffs, trade deal eyed

By Nikhil Sharma and Purvi Agarwal

May 26 (Reuters) - Latin American assets strengthened on Monday after U.S. President Donald Trump announced that he would postpone the deadline for threatened tariffs on the European Union, calming some revived trade war jitters.

MSCI's gauge for the region's equities .MILA00000PUS rose 0.3%, while an index for currencies .MILA00000CUS rebounded 0.3%.

The currencies index had dipped 0.3% in the prior session after Trump took aim at the European Union, saying trade negotiations with the region had become too sluggish.

On Sunday, he pushed the deadline for tariffs to July 9 from June 1, after European Commission President Ursula von der Leyen said the 27-nation bloc needed more time to produce a deal.

"In Latam, we are taking all these announcements with a pinch of salt. ... The situation can change dramatically from one day to another, so remaining cautious at the moment," said Andres Abadia, chief Latam economist at Pantheon Macroeconomics.

Most Latam currencies were little changed against the dollar in thin trading, with markets in the U.S. closed for a public holiday.

Currencies in Mexico MXN=, Peru PEN= and Colombia COP= were flat against the greenback.

"Trade discussions and policy shifts continue to influence the USD and U.S., both of which will constrain equity markets," said Bob Savage, head of markets macro strategy at BNY.

Minutes of the Bank of Mexico's last interest rate meeting are due to be released later in the day.

Brazil's real BRL= dipped 0.4% against the dollar. Brazil recorded a smaller-than-expected current account deficit in April, but also posted a narrower trade surplus.

Separately, data showed Brazilian consumers displayed some optimism in May, with the Consumer Confidence Index (ICC) rising by 1.9 points to 86.7 points.

This week will see crucial data releases for Latin America's largest economy, including gross domestic product figures for the first quarter.

A poll conducted by Brazil's central bank showed economists hiking their forecast for 2025 GDP growth to 2.14%, up from the 2.02% forecast in the previous week, amid indications from policymakers that monetary policy needed to be more restrictive amid persistent inflationary pressures and global uncertainties.

Sao Paulo's stock index .BVSP was up 0.3%, while Chile's main index .SPIPSA reversed early gains to dip 0.2%.

Chile's peso CLP= gained 0.1%, boosted by higher copper prices. The country is the world's largest copper producer.

Argentina's peso ARS=RASL shed 0.9% after two sessions of gains, while its stock index .MERV was 1.1% higher.

Latin America's broader currency index has risen 13.4% this year, with the parallel stock index soaring about 22%.

Trepidation over economic growth, unpredictable trade policies and fiscal risks, especially with Trump's spending and tax-cut bill, have revived the "Sell America" narrative, with investors cutting their exposure to U.S. assets.

The trend has put the spotlight on emerging markets, where investors are aiming to build a more geographically diversified portfolio.

J.P. Morgan upgraded its rating on emerging market equities to "overweight" from "neutral" last week.

Key Latin American stock indexes and currencies: