EMERGING MARKETS-Latam FX flat, stocks lower as US tariff concerns weigh on sentiment

By Ragini Mathur and Purvi Agarwal

July 16 (Reuters) - Most Latin American currencies were subdued in choppy trading on Wednesday while stocks edged lower as ongoing concerns around U.S. tariffs and its negotiations kept investors on edge.

On Tuesday, U.S. President Donald Trump agreed with Indonesia on a 19% U.S. tariff on imports from that country, down from the previously threatened 32%.

Trump added that letters setting tariff rates for dozens of smaller countries were also coming soon, though rates were expected to exceed 10%.

Indonesian equities .JKSE touched their highest in over a month, while the rupiah IDR= slipped.

The Latin American region, previously considered a relative safe haven from trade tensions, found itself in the crosshairs of U.S. tariff policy last week when Trump imposed steep tariffs on Brazil and Mexico.

Both countries are seeking negotiated solutions but have warned of retaliatory measures if agreements cannot be reached by August 1, Trump's latest deadline for tariff implementation.

The tariffs have proved to be beneficial for Brazil's President Luiz Inacio Lula da Silva, whose approval rating rose for the first time in a year, polls showed.

Lula has been trying to implement fiscal discipline in the economy, which has proved difficult with his administration's back and forth with the legislative. The bodies reached a stalemate regarding Lula's bill on the IOF tax.

"The current administration will use U.S. import tariffs on Brazil to gain political favor among its electoral base ... so anything that the U.S. does to antagonize Brazil is likely to support the current administration," said Thierry Wizman, global FX and rates strategist at Macquarie.

Brazil's real BRL= fell 0.3% as markets digested Lula's increasing popularity.

Separately, Brazil's Treasury projected that the country's gross debt would climb to 79% of its gross domestic product (GDP) by the end of the year.

Colombia's peso COP= was down 0.3% as oil prices fell about 1%. O/R

Trading in Mexico's MXN= and Peru's PEN= currencies was subdued, while Chile's markets were closed for a public holiday.

The dollar index =USD, which tracks the greenback against a basket of currencies, climbed 0.2%, pressuring MSCI's index for Latin American currencies .MILA00000CUS, down 0.2% as well.

The regional stocks benchmark .MILA00000PUS slipped 0.5%.

Brazilian shares .BVSP fell 0.5%, while Colombia's .COLCAP were down 0.4%.

Wizman also cited 'residual anxiety' from U.S. inflation data on Tuesday, which showed pressure from tariffs, and said more tariff-related inflation will come, which is weighing on broader sentiment.

Elsewhere, Egypt said it expected to have a delayed review of its $8 billion International Monetary Fund programme completed by September or October.

Key Latin American stock indexes and currencies: