EMERGING MARKETS-Latam FX, stocks recover as Israel-Iran ceasefire lifts sentiment

By Purvi Agarwal and Ragini Mathur

June 24 (Reuters) - Most Latin American currencies and stocks rebounded on Tuesday, after U.S. President Donald Trump announced a ceasefire between Israel and Iran, providing some relief from a 12-day conflict that had unsettled global investors.

Some caution, however, still remained after Israel struck Iran after the ceasefire came into effect, despite Trump saying Israel had called off airstrikes at his command to preserve the hours-old deal.

Markets still took the halt in tensions in stride, with Israeli stocks .TA125 closing 1.5% higher, while its shekel IRS= strengthened 1.4% to an over two-year high against the falling dollar. Dollar bonds in Israel were broadly higher.

Assets in the Middle East were broadly higher, with Turkey's stocks .XU100 ending 3.5% higher. Ones in Saudi Arabia .TASI logged a 2.4% gain and its dollar bonds gained marginally.

"The focus will be on whether the ceasefire can hold ... this is still a fluid situation," said Kathleen Brooks, research director at XTB.

"The FX market acted in a risk off fashion on Monday, so the dollar is unwinding this morning and we expect it to remain sensitive to headline risk from the region."

Investors took on risk, selling off the dollar =USD that dipped 0.3% and provided some lift to most EM currencies.

MSCI's index for regional currencies .MILA00000CUS was up 0.6% and was on track for its biggest single-day percentage gain in one week, while a gauge for regional stocks .MILA00000PUS jumped 1.6%, set for their first gain in six sessions.

The currency in Chile CLP=, the world's largest copper producer, gained 1%, tracking copper prices at two-week highs. The peso had logged a sharp fall on Monday.

Mexico's peso MXN= gained 0.6%, while stocks .MXX were up 0.4%. Data showed headline inflation rose in line with expectations in the first half of June.

This reinforced expectations that the central bank should continue to bring down interest rates.

"Policymakers at the central bank will probably be encouraged by the fact that the recent sharp rise in food inflation appears to be losing steam," said William Jackson, chief EM economist at Capital Economics.

Jackson estimates smaller interest rate cuts through the second half of the year, after the last 50 basis points on Wednesday.

Meanwhile, Brazil's central bank signaled a potential pause in rate hikes on Tuesday, noting that much of its "particularly quick and very firm" tightening cycle has yet to take effect.

Brazil's real BRL= was little changed against the greenback, while its stocks .BVSP were 0.7% higher.

Colombia's peso COP= was near flat, buoyed by the weakness in the dollar, as oil prices fell about 5% on news of the ceasefire. O/R

This week, investors are also watching for rate decisions from Mexico, Argentina and Colombia.

Elsewhere in EMs, Hungary's central bank kept rates on hold at 6.5%, saying it must keep monetary conditions tight to rein in stubborn inflation.

Investors were also digesting debt issuance from several EMs, including Turkey and Chile, while Barbados announced the results to its first conventional international bond sale in 15 years, as per a report.

Key Latin American stock indexes and currencies around 1453 GMT: