EMERGING MARKETS-LatAm asset values soften as investors cautious about Venzuela

By Niket Nishant

Dec 1 (Reuters) - Latin American assets were slightly lower on Monday, opening the final month of the year on a cautious note as investors weighed rising tensions between the United States and Venezuela and took stock of fresh regional data.

The MSCI index tracking regional stocks .MILA00000PUS slipped 0.24% while the currencies index .MILA00000CUS fell 0.18%. Both indexes marked their fourth consecutive month of gains in November.

Expectations of Federal Reserve interest rate cuts have underpinned sentiment in recent sessions, but with the optimism now baked in, investors looked for fresh drivers.

They may get some direction at 8 p.m. EST (0100 GMT) when Fed Chair Jerome Powell speaks. His remarks will be parsed closely for any signals on the timing or scale of future rate reductions.

Uncertainty over U.S.-Venezuela relations unsettled investors. U.S. President Donald Trump said on Saturday that Venezuela's airspace should be considered "closed in its entirety."

Any military confrontation between Washington and Caracas could reverberate across Latin America. Trump plans to discuss Venezuela with his top advisers at 5 p.m. EST (2200 GMT).

The Trump administration has been weighing Venezuela-related steps as part of its efforts to counter what it alleges is President Nicolas Maduro's role in supplying illegal drugs that have killed Americans, accusations the socialist leader rejects.

Venezuela is also an OPEC member, though its sway over global oil flows has been curtailed by U.S. sanctions.

"While Washington should continue to ratchet up pressure on the Maduro regime, a military intervention would hold first- and second-order risks to global energy and food markets," analysts at the Atlantic Council wrote in a note.

INVESTORS EVALUATE PMI NUMBERS

Brazil's Bovespa .BVSP was down 0.35%. The country's Purchasing Managers' Index contracted for the seventh straight month in November, highlighting the impact of U.S. tariffs on Latin America's largest economy. The real BRL= was 0.42% lower against the dollar.

"We have had some further signals that the manufacturing sector is under pressure, but we have to say also that the downturn is easing," said Andres Abadia, chief LatAm economist at Pantheon Macroeconomics, pointing to a benign outlook for 2026 on the back of easing trade tensions.

Chile's main stock index .SPIPSA was up 0.15%, while the local currency peso CLP= lost 0.12%. Data showed economic activity rose more than expected, 2.2%, in October, marking the 16th consecutive month of expansion on a year-over-year basis.

Anticipating the Andean nation's presidential runoff on December 14, investors have favoured far‑right candidate Jose Antonio Kast in the belief a conservative government will embrace market‑friendly initiatives.

Mexican equities .MXX were down 0.1%, and the local peso traded with caution after a PMI survey showed manufacturing activity contracted for the third straight month in November.

In Argentina, equities .MERV jumped 1.2%, set for five straight days of gains. The peso ARS=RASL remained steady for the day.

Colombian stocks .COLCAP added 0.16%. The state-run National Department of Statistics will release November's inflation figures later this week.

Inflation is likely to have moderated in November, although a Reuters poll on Friday showed forecasters project it will remain above the central bank's target through 2027.

"Despite a breakdown in relations with the U.S. administration... Colombia has benefited from some of the factors common to LatAm peers, but even more so by the anticipation of a shift towards a more market-friendly government after the May 2026 election," said Hasnain Malik, EM equity and geopolitics strategist at Tellimer Research.

Peruvian stocks .MXNUAMPESCPGPE rose 0.53%, while the sol currency PEN= slipped 0.3%.

Key Latin American stock indexes and currencies: