EMERGING MARKETS-LatAm assets advance as rate cut hopes boost risk appetite

By Niket Nishant and Twesha Dikshit

Nov 25 (Reuters) - Latin American stocks and currencies climbed on Tuesday as hopes of a December rate cut by the Federal Reserve and a rebound in global risk appetite prompted traders to cautiously rebuild positions after last week's rout.

The MSCI index tracking regional stocks .MILA00000PUS rose 0.9%, while an equivalent currencies gauge .MILA00000CUS climbed 0.1%.

Investors in the region have been grappling with a flurry of developments in recent sessions, including the release of delayed U.S. government data following the shutdown, shifting expectations for an interest rate cut by the Federal Reserve and signs of progress toward a possible peace deal in Ukraine.

The latest moves underscore how closely sentiment in emerging markets remains tied to global and U.S. factors, with solid news on multiple fronts seen as crucial to sustaining momentum.

"We assume financing conditions for emerging markets remain benign in 2026, as the Fed continues to cut rates and the recent weakness in the U.S. dollar is broadly sustained," analysts at S&P Global wrote in a note.

"Favorable financing conditions, combined with low unemployment levels and improving real wages, will help domestic demand remain relatively robust in 2026 in most emerging markets."

DIVERGENCE IN REGIONAL PERFORMANCE

In Brazil, the Bovespa .BVSP index climbed about 1%. A rise in iron ore futures helped boost shares of metals and mining company Vale VALE3.SA. The real BRL= was flat.

Colombia's peso COP= was slightly weaker against the dollar, while equities .COLCAP climbed 0.6%.

State-run energy company Ecopetrol ECO.CN on Monday warned that natural gas supply to the country's northern and central regions could be at risk due to an ongoing roadblock at its Guajira field.

Argentine stocks .MERV were flat while the peso ARS=RASL inched lower against the dollar.

"FX related pressures are likely to fade in the coming weeks as electoral uncertainty dissipates," Mauricio Monge, senior economist at Oxford Economics, said in a note earlier this month.

Mexican stocks .MXX were flat, while the peso MXN= strengthened slightly. Data released by the national statistics agency on Tuesday showed that retail sales in September were flat compared to August.

Key Latin American stock indexes and currencies: