EMERGING MARKETS-EM FX subdued as Russia-US talks begin; Latam FX, stocks eye weekly gains

By Pranav Kashyap, Sukriti Gupta and Purvi Agarwal

Aug 15 (Reuters) - Most emerging market currencies were subdued on Friday as investors anticipated the outcome of high-stakes ongoing U.S.–Russia talks, while those in Latin America strengthened on prospects of lower U.S. interest rates.

U.S. President Donald Trump and his Russian counterpart Vladimir Putin begun the key meeting in Alaska, where Trump seeks a ceasefire between Russia and Ukraine.

Trump said he would not negotiate on behalf of Ukraine and would let Kyiv decide whether to engage in territorial swaps with Russia, assuaging European concerns that he would sell out Ukraine by recognizing Russian control over territories.

Ukraine's dollar bonds have rallied since the announcement of the meeting, as progress on ending the over three-year-long war seemed promising. However, they have had a volatile week leading up to the meeting, broadly gaining 0.7 cents on the dollar on Friday.

Russia's rouble RUB= slipped 0.5% to a more than one-week low against the dollar, over-the-counter market data showed.

"Unless there is a dramatic result like a break in the discussions, which I do not assign a high probability to materialize, markets are going to take it okay," said Alfredo Coutino, director for Latin America at Moody's Analytics.

"If there is a willingness to continue the dialogue and to continue negotiating, markets are going to stay relatively calm."

In Latin America, most currencies edged up against the dollar =USD, as markets priced in a 25-basis-point cut from the Federal Reserve in September.

Hopes of a jumbo 50-bps cut were nipped in the bud after mixed economic data this week, the latest being an in-line reading of retail sales.

"Markets are trading based on economic data and sentiment towards what the Fed is going to be doing rather than the summit ... If it weren't a summer Friday, markets would be a little more volatile," said Brendan McKenna, economist at Wells Fargo.

On the day, Colombia's peso COP= hit nearly a one-month high and was poised for its biggest daily jump in two weeks. Data showed Colombia's economy grew 2.1% year-on-year in the second quarter, below market expectations.

Other Latam currencies gained between 0.1% and 0.3%. Brazil's real BRL= was on track for a fourth week of gains.

MSCI's Latin American currency gauge .MILA00000CUS gave up early gains and was last flat, while a similar gauge for stocks .MILA00000PUS rose 0.6%. Both indexes were set for a second consecutive week of gains.

Colombian stocks .COLCAP rose 0.3%, in their eighth straight session of gains, their longest streak since last August.

Peruvian stocks .SPBLPGPT rose 0.4%, while the sol currency PEN= was slightly higher in thin trading after the country's central bank held its key interest rate at 4.50% for the third successive time.

Argentina's markets were closed for a local holiday.

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 Bolivia's fragile economy and pave the way for an IMF program.

Key Latin American stock indexes and currencies: