EMERGING MARKETS-LatAm assets start November strong; Brazil, Mexico rate calls loom

By Nikhil Sharma and Sukriti Gupta

Nov 3 (Reuters) - Latin American assets opened November on a strong footing on Monday, kicking off a pivotal week packed with key data and monetary policy decisions from regional economic powerhouses Brazil and Mexico.

MSCI's regional stock gauge .MILA00000PUS was up 0.5%, tracking a global rally on optimism about a U.S.-China trade truce. A parallel index for local currencies .MILA00000CUS also rose 0.5%.

"What ultimately is helping the appreciation of other currencies against the dollar is the idea that the global growth narrative can improve... getting along with China and trying to minimize any damage to each other is actually a very good sign for the rest of the globe," said Juan Perez, director of trading at Monex.

Regional markets ended October with modest gains after a roller-coaster ride as shifting global rate expectations and geopolitical tensions shaped investor sentiment.

Argentina was a stand-out last month, as its stocks skyrocketed following a surprise victory for President Javier Milei's party in midterm elections, bolstering investor confidence in his economic overhaul and signaling continued support from Washington.

The main stock index .MERV surged a record 44.5% last week and extended its rally on Monday, rising another 3.8% to a new high.

The local peso ARS=RASL was down 2.3%. The country's agricultural export revenue dropped 56% in October from a year earlier to $1.12 billion.

In Brazil, economists see the central bank holding the Selic at a near two-decade high of 15% on Wednesday.

While high interest rates are helping to rein in inflation, which remains above the target range, they are beginning to weigh on the economic activity.

"We don't expect really strong equity gains until interest rates are much lower than they are now. But the high rates will be good for the currency," said Jon Harrison, managing director of EM macro strategy at TS Lombard.

The country benchmark Bovespa .BVSP index was up 0.45%, while the real BRL= currency added 0.32%. A survey showed contraction in factory activity eased in October amid cooling cost pressures.

Mexico also braced for a rate-setting announcement due Thursday, with consensus favoring a continuation of the easing cycle in view of slowing inflation and a weak economy.

This would mark the Bank of Mexico's 12th reduction since it began a cycle of easing in early 2024. Mexican equities .MXX slipped 0.8% and the local peso MXN= added 0.3%.

Investors will also sift through Mexico's key inflation, industrial output and consumer confidence data, scheduled for release later this week.

In other regional economies, the Colombian peso COP= added 0.1%. Colombia's central bank held the benchmark rate at 9.25% last week amid inflation uncertainty and favorable economic data.

Chile's currency CLP= jumped 0.5% as economic activity grew 3.2% in September compared to a year earlier, boosted by gains in trade and services.

Key Latin American stock indexes and currencies: