EMERGING MARKETS-Latin American currencies edge up on Fed rate-cut hopes; stocks mixed

By Pranav Kashyap

Aug 13 (Reuters) - Latin American currencies edged up on Wednesday as traders priced in the likelihood of a Federal Reserve interest rate cut next month, while the region's stocks were mixed.

A gauge tracking the region's equities .MILA00000PUS was flat, while a similar measure of currencies .MILA00000CUS rose 0.2%.

Emerging market currencies climbed at the expense of the dollar =USD as the release on Tuesday of tame U.S. inflation data and a recent dismal U.S. jobs report cemented expectations of a U.S. interest rate cut next month.

CME Group's FedWatch tool now pegs the probability of a rate cut at the Fed's September 16-17 meeting at 97%, up from about 86% a day earlier and just 57% a month ago.

A downbeat retail sales surprise caused Brazil's benchmark equities index .BVSP to shed 0.5% and the real currency BRL= to lose ground - alone among its major regional peers. The data indicated that Latin America's largest economy is cooling under the weight of interest rates that are near a 20-year high. Brazilian statistics agency IBGE reported on Tuesday that inflation undershot market expectations in July.

"Rising real incomes and a still-strong labor market are no longer sufficient to offset the drag from high borrowing costs and elevated uncertainty," said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics.

Brazil's President Luiz Inacio Lula da Silva on Tuesday said his government would provide 30 billion reais ($5.55 billion) in credit as part of a plan to support companies that export goods and are affected by steeper U.S. import tariffs.

Brazil, a member of the BRICS group, has faced increased pressure from U.S. President Donald Trump, who has accused the bloc of pursuing "anti-American policies."

Other BRICS nations, including India and South Africa, are also contending with some of the highest U.S. tariff rates.

Mexico's peso MXN= and its main stocks index held steady on Wednesday.

Chilean stocks .SPIPSA rose 0.4%, while the country's peso currency CLP= gained 0.4%. Minutes from the Chilean central bank's last meeting showed the rate cut delivered on July 29 was the "only plausible option."

Argentine stocks .MERV and the country's peso currency were largely steady ahead of the release of inflation data.

TRUMP-PUTIN SUMMIT

Pakistan's international bonds rose as much as 1 cent to between 90-100 cents on the dollar XS2322321964=TE following a ratings upgrade from Moody's. The move lifted most of the country's bonds to their highest levels since early 2022 when fears of a full-blown debt crisis sent them plunging to as little as 30 cents on the dollar.

The South African rand ZAR= extended gains slightly, touching a three-week high after data showed the country's retail sales rose 1.6% on a year-over-year basis in June.

Markets also were focusing on a virtual sit‑down on Wednesday between European and Ukrainian leaders and Trump before the latter's summit with Russian President Vladimir Putin in Alaska on Friday.

Ukraine's international dollar bonds XS2895057177=TE were down more than 1.2 cents.

The looming summit has stirred European concerns that Trump and Putin could cut sweeping deals or strong‑arm Ukraine into accepting a deal that forces it to surrender a significant amount of land.

Key Latin American stock indexes and currencies: