EMERGING MARKETS-Fed-cut bets lift Latin American currencies; investors eye US–Russia talks

By Pranav Kashyap

Aug 15 (Reuters) - Most Latin American currencies edged higher on Friday as the dollar weakened on bets that the Federal Reserve would cut interest rates next month, while stocks were mixed with investors focusing on U.S.–Russia talks over the war in Ukraine.

Brazil's currency BRL= added 0.5%, putting it on track for a four-week winning run. Data this week showed that inflation in Latin America's largest economy came in below forecasts in July but still above the target of the central bank, which has little room to cut interest rates from near a 20-year peak.

A gauge tracking Latin American currencies .MILA00000CUS inched up 0.2%, while a similar gauge for stocks .MILA00000PUS jumped 1%.

Peruvian stocks .SPBLPGPT rose 0.7%, while the sol currency PEN= was flat in thin trading after the country's central bank held its key interest rate at 4.50% for the third straight time. Inflation in Peru, a major copper producer, remains within the central bank's target range.

Colombia's peso COP= hit nearly a one-month high and was poised for its biggest daily jump in more than a week, while stocks .COLCAP rose 0.3%.

Argentina's markets were closed for a local holiday. The country's stock index .MERV logged its worst daily drop in more than two months on Thursday. The Argentine peso ARS= logged 10 consecutive sessions of gains on Thursday.

Latin American currencies were lifted this week by mounting expectations that the Fed will slash rates by 25 basis points next month, a shift fueled by a recent jobs report that dramatically reshaped the outlook for U.S. monetary policy.

TRUMP-PUTIN SUMMIT

Global investors are keeping a close eye on President Donald Trump's summit with Russian President Vladimir Putin on Friday in Alaska. The talks will focus on ending the war in Ukraine.

With Ukrainian President Volodymyr Zelenskiy excluded from the talks, investors fretted that the outcome could freeze the conflict and implicitly validate Russian control of about one-fifth of Ukraine.

Kyiv's international dollar bonds rose nearly 1 cent, while the Russian rouble RUB= hit more than a one-week low against the dollar.

"Putin is unlikely to scale back his territorial ambitions and Zelenskiy equally unlikely to concede any ground. The most that seems achievable at this stage is that Putin moderates some of his military strategies," said Andrew Kenningham, chief Europe economist at Capital Economics.

Voters in Bolivia will go to the polls on Sunday to elect a new president, vice president and all members of the country's legislature. Investors hope that a political U-turn could help shore up the country's fragile economy and pave the way for an IMF program.

"A likely right-wing presidential victory in Bolivia could finally address macroeconomic imbalances and the impending sovereign and currency crisis," said Mauricio Monge and Tim Hunter, senior Latin America economists at Oxford Economics.

Key Latin American stock indexes and currencies: