EMERGING MARKETS-LatAm assets cautiously rise amidst Trump's trade jitters; Brazil fiscal package delayed

By Pranav Kashyap and Nikhil Sharma

June 3 (Reuters) - Latin American assets rose in cautious trade on Tuesday, led by Brazil's real, which defied the postponement of the fiscal package, while traders remained focused on the unpredictable landscape of U.S. trade policy.

MSCI's composite index for Latin American currencies .MILA00000CUS ticked up 0.5%, extending the previous session's 0.9% uptick. Regional equities, as measured by .MILA00000PUS, rose 0.49%.

Brazil's real BRL= traded 0.6% higher against the dollar, at a near two-week peak. Sao Paulo's Bovespa .BVSP rose 0.49%.

Brazil's much-anticipated fiscal package — a critical maneuver to rein in the nation's persistent budget deficit that was originally slated for an afternoon unveiling — has been punted to next week. Finance Minister Fernando Haddad clarified that the measures would be revealed after a Sunday meeting with congressional leaders.

Brazil, the continent's economic behemoth, is in a high-stakes race to eliminate its deficit this year before interest payouts.

The International Monetary Fund (IMF) upgraded Brazil's economic growth forecast to 2.3% for the current year, a 30-basis-point bump from its April projection.

Brazilian President Luiz Inacio Lula da Silva said his country has been trying to negotiate tariffs with the U.S., but vowed to take action if no agreement is reached.

The overarching narrative of U.S. trade policy continued to dictate global risk appetite. Hopes for a breakthrough gained traction after a Reuters report said the Trump administration urged nations to submit their most compelling trade offers by Wednesday, pushing for acceleration in negotiations ahead of a 90-day tariff pause deadline just five weeks away.

Further assuaging concerns, the prospect of a high-stakes dialogue between U.S. President Donald Trump and Chinese leader Xi Jinping later this week provided a ballast.

"LatAm avoided high reciprocal tariff rates due to relatively balanced trade with the U.S. in the region ex-Mexico, and given deep integration of North American supply chains," said Joseph Incalcaterra, head of LatAm FX strategy at HSBC Securities.

"Currently, the region is on the back-burner as the U.S. focuses on trade deals with Europe and Asia."

Mexico's peso MXN= was flat, while its benchmark equity index .MXX retreated 0.1%.

Domestic concerns centered on the nation's inaugural judicial elections, part of a contentious judicial reform.

A notably low turnout on Sunday amplified fears that the vote could undermine the very legitimacy of the overhaul, introducing a fresh layer of political uncertainty.

Elsewhere, Chile's peso CLP= eased 0.2%, while Santiago Stock Exchange's main index .SPIPSA rose 0.9%.

Colombia's peso COP= surged 1%, poised for its biggest single-day climb in over a month and was trading close to over a two-month high.

The Colombian currency's gains came on the back of climbing crude prices fueled by intensifying geopolitical tensions. O/R

In Buenos Aires, Argentina's Merval index .MERV notched a near 1% gain, poised to break a five-session losing streak.

Elsewhere, Ukraine's international bonds dipped, as persistent geopolitical friction between Moscow and Kyiv cast a long shadow, eclipsing the fleeting optimism from a second round of peace talks.

South Korea's liberal party candidate Lee Jae-myung was elected president in Tuesday's snap election, after he evaded military cordons to vote against a shock martial law decree imposed by his ousted predecessor.

Key Latin American stock indexes and currencies: