EMERGING MARKETS-Higher commodities, weaker dollar lift LatAam assets amid Trump policy twists

By Nikhil Sharma and Pranav Kashyap

June 2 (Reuters) - Latin American currencies rose on Monday, with Mexico's peso spearheading the rally as investors leveraged a softening dollar and robust commodity prices against the shifting landscape of U.S. President Donald Trump's trade policies.

MSCI's index of Latin American equities .MILA00000PUS rose 0.75%, while a parallel index for currencies .MILA00000CUS was up 0.2%.

The dollar index =USD dropped 0.6% to hit its lowest level since April 22 as investors continued to reassess the greenback's safe-haven appeal.

Mexico's peso MXN= chalked up a 1% gain against the greenback and was near an eight-month high, putting it on track for its most significant single-day climb in three weeks.

Domestically, Mexico held its first-ever judicial elections on Sunday, part of a contentious effort to reform the nation's judiciary – a move critics warn could imperil the rule of law.

Results are anticipated on June 15. Mexican stocks .MXX were flat.

Surging crude prices provided tailwinds for Latin American currencies after the OPEC+ cartel held firm on July output increases, largely confounding market expectations.

Oil export revenues form a critical bedrock of national incomes, particularly for countries such as Mexico and Brazil in South America.

In Brazil, the real BRL= gained 0.7%, while the country's main stock index .BVSP slipped 0.21%.

Meanwhile, a poll of economists by Brazil's central bank indicated an anticipated year-end inflation rate of 5.46%, a downward revision from 5.50% projected last week.

Uncertainty prevailed among investors after Trump's threat on Friday to hike duties on imported steel and aluminum to 50%, effective this Wednesday.

Adding to the trade tumult, a Reuters report revealed the White House's demand for countries to present their "best and final" trade negotiation offers by Wednesday, a move aimed at accelerating discussions with various partners before the July 9 deadline.

Trump's trade policies have proven inimical to U.S. assets, which have lately shed their safe-haven allure, compelling investors to seek refuge in international alternatives.

"Overall level of uncertainty and lack of reliability in the U.S. continues to feed one narrative, and that is diversification away from the dollar," said Alejandro Cuadrado, global head of FX and LatAm Strategy at BBVA.

Meanwhile, copper-producing powerhouses Peru and Chile saw their assets leap, with Lima stocks .SPBLPGPT soaring to an all-time high and the Chilean peso CLP= advancing 0.64%, both boosted by rising price of the red metal.

Data showed Chile's economic activity rose 2.5% in April compared with the same month last year - notching its tenth consecutive increase on a yearly basis supported by higher copper output.

Colombian markets were closed for a public holiday, while stocks in Argentina .MERV continued to slide for the fifth consecutive session.

Elsewhere, Ukrainian sovereign bonds slipped as the second round of Russia-Ukraine peace talks collapsed precipitously within the hour.

The 2041 maturity international bond shed approximately 2 cents on the dollar.

Key Latin American stock indexes and currencies: