EMERGING MARKETS-Latin American assets rebound as commodities jump, trade tensions simmer

By Niket Nishant and Pranav Kashyap

Oct 13 (Reuters) - Latin American assets snapped back into the green on Monday, recovering from last week's bruising losses and as commodity prices gained, even though some caution prevailed as investors were on the lookout for any signs of trade friction between the U.S. and China.

MSCI's gauge for Latin American currencies .MILA00000PUS gained 1.1%, while a parallel index tracking regional currencies .MILA00000CUS was up 0.2% against the dollar =USD.

Investor sentiment showed signs of stabilizing after the indexes logged their biggest weekly declines since early July following U.S. President Donald Trump's threat to ramp up tariffs on imports from China on Friday.

However, Trump eased his tone over the weekend and Treasury Secretary Scott Bessent said on Monday that the U.S. president was set to meet Chinese leader Xi Jinping in South Korea in late October and said "the 100% tariffs on China does not have to happen."

A flare-up could further complicate the outlook for investors who have been recovering from market ructions when Trump imposed tariffs on world economies in April.

"While we have largely moved on from the tariff tantrum of April, Friday's market decline is an important reminder that trade tensions are still in the background and can cause bouts of short-term volatility," said Richard Saperstein, chief investment officer, Treasury Partners.

The Brazilian President said he would announce his nomination for the next judge to sit on the country's Supreme Court once he returns from Europe.

With Brazil's Supreme Court under intense scrutiny this year — accused by critics of overreach and politicization amid high-profile rulings, including the conviction of former President Jair Bolsonaro for plotting a coup — the President's next judicial appointment is landing at a politically charged moment.

Equities were also supported by strength in commodities and a recovery in oil prices.

Crude exporters in the region including Brazil's Petrobras PETR4.SA and Argentina's YPF YPFDm.BA gained 3.5% and 0.8%, respectively. Miners such as Brazil's Vale VALE3.SA and Grupo Mexico GMEXICOB.MX gained 1.6% and 2.7%, respectively, while Chile's SQM SQMA.SN climbed 0.4%.

Mexican stocks .MXX and Brazil's Bovespa .BVSP added 0.9% each.

Argentina's local stock index .MERV was flat while the peso ARS=RASL jumped 5.8%, ahead of the upcoming meeting between President Javier Milei and Trump at the White House, which some analysts believe will be crucial to underpinning market confidence.

In Peru, the sol PEN= inched up 0.3% in light trading and the Lima Stock Exchange .MXNUAMPESCPGPE gained 2.4% as investors continued to digest the political turmoil following President Dina Boluarte's removal.

As the U.S. government shutdown stalls key economic data releases, investors are scanning the horizon for clues to guide near-term positioning. With only a handful of data points — including Argentina’s inflation later this week — global cues are stepping into the spotlight.

All eyes are on central bankers gathering at the International Monetary Fund meetings, while geopolitical developments are also shaping sentiment.

Key Latin American stock indexes and currencies: