EMERGING MARKETS-LatAm currencies near record high, Argentine stocks jump

By Pranav Kashyap and Nikhil Sharma

June 10 (Reuters) - An index of Latin American currencies pared early gains, but was still near its all-time peak, while Argentine central bank's package to boost reserves lifted the country's equities.

MSCI's index for Latin American currencies .MILA00000CUS edged up 0.1%, just shy of a record high it hit in mid-2011.

This unfolded against a backdrop of persistent global uncertainty, exemplified by the second day of closed-door negotiations in London between Washington and Beijing.

U.S. Commerce Secretary Howard Lutnick said trade talks with Chinese officials were going well, but said they could run into Wednesday.

The talks, aimed at securing a breakthrough on export controls, are critical for de-escalating trade tensions that have already prompted the World Bank to slash its 2025 global growth forecast and warn of a "significant headwind".

The trade jitters have prompted investors to redeploy capital from Wall Street to higher-yielding alternatives.

"U.S. trade and fiscal policies are unnerving foreign investors, which will lead to some combination of higher yields and a cheaper dollar," said Kit Juckes, chief global FX strategist at Societe Generale.

In Latin America, leading the charge in stocks was Argentina, where the nation's stock index .MERV surged 4.6% to a near one-month high.

The boost came from a package of economic measures unveiled by the central bank, engineered to boost its reserves that were in the red by last December, ahead of a review by the International Monetary Fund of the country's recent $20 billion loan agreement.

These measures form a vital pillar of President Javier Milei's 'Phase 3' economic blueprint, which promises an overhaul including the easing of monetary controls, a floating peso and a cleansing of the central bank's balance sheet.

An index for Latin American equities .MILA00000PUS advanced 0.5%.

The Colombian peso COP= plunged 1.7% - poised for its biggest daily drop in over two months.

This followed a Reuters report quoting a government source that Colombia has authorized the use of an "escape clause" to temporarily suspend compliance with its fiscal rule.

The move is set to inflate the South American nation's fiscal deficit beyond the government's 5.1% target, sending its 5-year CO5YT=RR and 10-year bond CO10YT=RR prices down 0.2% and 0.5% respectively.

The local bourse .COLCAP clawed back nearly 1% after Monday's sharp losses.

Brazil's main stock index .BVSP climbed 0.6%, though its real BRL= slipped 0.3% — set to break its longest daily winning streak in over four months.

While annual inflation in Brazil hovers stubbornly above the central bank's target range, May data showed a bigger slowdown than anticipated.

In Mexico, the peso MXN= slipped 0.1% against the dollar. May consumer prices revealed an acceleration to 3.6% from 3.0% a year ago.

The local equity index .MXX, however, rose 0.6%.

Meanwhile, Chile's peso CLP= lost 0.4%, while stock index .SPIPSA gained 0.4%.