EMERGING MARKETS-Argentine markets make comeback after US lifeline

By Nikhil Sharma and Pranav Kashyap

Sept 22 (Reuters) - Latin American markets were mixed on Monday, but Argentina rebounded sharply on hopes U.S. financial support could be in the pipeline to shore up the country's struggling assets.

Buenos Aires stocks .MERV surged 6.6% and were on track for their best single-day gain in over five months, with financial stocks leading the charge.

The peso ARS=RASL leapt more than 4%, its strongest day in over four months, snapping a bruising 13-day losing streak that had prompted central bank intervention last week.

Argentina's international dollar bonds also joined the rally, with the 2046 maturity US040114HW38=TE climbing 6.8 cents to the dollar.

U.S. Treasury Secretary Scott Bessent said "all options" for stabilization are on the table to support Argentina's government, including swap lines and direct currency purchases.

But he emphasized any action would follow a Tuesday meeting in New York between President Donald Trump and his Argentine counterpart Javier Milei.

The Argentine rally marks a dramatic shift from last week's market meltdown, triggered by a recent legislative blow to Milei that raised doubts about his austerity push and his party's strength ahead of the October midterm election.

The country was also hitting pause on export taxes for all grains and by-products for over a month, a move aimed at turbocharging sales and boosting dollar inflows into the economy.

"If you're using the reserves to try to stabilize the FX market, there's less reserves to pay for the debt," said Alejandro Cuadrado, global head of FX and LatAm Strategy at BBVA.

Cuadrado further noted that while U.S. support could provide a temporary cushion for the central bank and help stabilize conditions in the near term, it does not resolve the medium‑term problems or ease investor jitters ahead of the October 26 midterms.

Meanwhile, MSCI's index for Latin American currencies .MILA00000CUS dipped 0.2%, while a gauge of the region's equities .MILA00000PUS rose 0.2%.

Investors weighed comments from at least five Federal Reserve officials, many of whom questioned the need for more U.S. interest rate cuts with inflation still above target and the labor market holding firm. Investors looked ahead to Fed Chair Jerome Powell's speech on Tuesday, following last week's 25-basis-point cut.

Brazilian markets took a breather, with the real BRL= slipping 0.3%, its fourth straight decline, and stocks .BVSP easing off record highs hit in the previous session.

Investors weighed Washington's sanction threats against Brazilian officials while keeping an eye on mid-month inflation data due later this week.

The Colombian peso COP= jumped nearly 1% to trade at an over one-year high, while stocks .COLCAP were flat.

In corporate news, LATAM Airlines LTM.SN announced a firm order for 24 E195-E2 aircraft from planemaker Embraer EMBR3.SA, plus purchase options for 50 more. Shares of Embraer jumped 4.8% and LATAM Airlines fell 1.8%.

Mexico's equity index .MXX was up 0.9% and the peso MXN= gained marginally as traders positioned themselves for a quarter point interest rate cut by the central bank on Thursday.

The economic outlook for Mexico remains clouded, with International Monetary Fund calling for structural and fiscal reforms to bolster stability. The IMF on Friday forecast growth to improve modestly in 2026.

Elsewhere, Peruvian equities .MXNUAMPESCPGPE hit a record peak.

Key Latin American stock indexes and currencies: