EMERGING MARKETS-Most LatAm currencies ease, stocks mixed; Argentine assets drop

By Pranav Kashyap

Aug 25 (Reuters) - Most Latin American currencies hit the brakes on Monday, following a strong run in the previous session, while stocks split direction as investors sifted through a handful of economic data.

MSCI's gauge tracking Latin American currencies .MILA00000CUS nudged 0.1% higher after registering its biggest one-day rise in four months on Friday.

Meanwhile, a similar gauge for regional equities .MILA00000PUS was flat after logging its best day in over five months in the previous session.

Argentina's international dollar bonds declined, amid government corruption allegations close to President Javier Milei, with the 2035 issue down over 2 cents to a one-month low.

Stocks in Buenos Aires .MERV slumped nearly 2.3% - hitting an over one-month low, while the peso ARS= dropped to a near one-month low, down 1.5%.

Argentine authorities conducted raids across multiple properties in connection with an alleged kickback scheme that could implicate senior government officials, according to local media reports.

The controversy comes at a sensitive moment for Milei, who is already grappling with legislative setbacks in Congress. With midterm elections looming in October - widely seen as a referendum on Milei's austerity measures and market-driven reforms - the scandal threatens to further complicate the administration's political calculus.

Brazil's real BRL= rose 0.17%, while the Mexican peso MXN= was largely flat against the dollar.

Brazilian consumer confidence fell again in August, data showed, indicating caution in the backdrop where interest rates are parked at their highest level in nearly two decades. This comes after a recent series of economic data showed the economy was losing steam - weighed down by the 15% interest rate.

Brazilian stocks .BVSP on the other hand, advanced 0.22%.

On a global front, after Federal Reserve Chair Jerome Powell's dovish turn at Jackson Hole on Friday, the carry trade could potentially make a comeback.

Powell cracked the door open to a September rate cut that pinned the dollar =USD at a four-week low as markets price in roughly 52 bps of easing by year-end, according to LSEG data.

The prospect of lower U.S. rates has weighed on the dollar, which has already weakened nearly 10% this year. It could revive its role as a preferred funding currency for carry trades in countries with historically high interest rates like Brazil.

"Jerome Powell's "all clear" signal for rate cuts turned a down week for stocks into a gain, but now the discussion will likely turn to how aggressive the Fed may be," said Chris Larkin, managing director, trading and investing, E*TRADE at Morgan Stanley.

The Colombian peso COP= ticked up 0.2%, while stocks in Bogota .COLCAP slipped 0.2%. Chile's peso CLP= and Peru's sol PEN= fell 0.37% and 0.2%, respectively.

Key Latin American stock indexes and currencies: