EMERGING MARKETS-Latam equities jump, Brazil's Bovespa sets new record; regional developments in focus

By Twesha Dikshit and Nikhil Sharma

Dec 2 (Reuters) - Latin American equities advanced on Tuesday after starting the week on a cautious note, with Brazil's benchmark equity index touching a fresh peak, while investors monitored regional developments and assessed data.

The MSCI index tracking regional stocks .MILA00000PUS jumped 1.1% to hit its highest since April 2022, while a similar gauge for currencies .MILA00000CUS added 0.15% - on pace for its seventh-straight day of gains.

Both indexes marked their fourth consecutive month of gains in November, with LatAm assets outperforming some of their global peers this year, boosted by a weaker dollar and attractive valuations.

"Emerging markets and LatAm, in particular Andean countries, have been ahead of developed markets in lowering rates, and that has obviously helped the valuation in equities," said Alejandro Cuadrado, EM/Latin America strategist and global head of FX at BBVA.

"We have had a lot of softening of the dollar and flatter expectations for most central banks, which should keep volatility relatively low. That's still fostering a good environment for continuing carry trades."

BOVESPA TOPS 160,000

Brazil's Bovespa .BVSP Index surpassed 160,000 points for the first time and was last up 1.32%. With GDP data expected on Thursday, economic growth was expected to have expanded modestly in the third quarter, according to most economists polled by Reuters.

The real BRL= firmed 0.5% against the greenback with data showing industrial production rose 0.1% in October from September, according to government statistics agency IBGE.

The currency has also been among the top performers this year, up 13.6% year-to-date, thanks to higher interest rates boosting carry-trade inflows.

"High real rates create an attractive carry trade and margin expansion setup. The next rate-cutting cycle could ignite a broader equity re-rating as politics trend more market-friendly ahead of the 2026 election," said Malcolm Dorson, Head of EMs at Global X ETFs. Brazil's next presidential election is scheduled for October 2026.

Signs of easing trade tensions have also aided local markets, particularly after U.S. President Donald Trump removed the 40% tariffs on several Brazilian food products last month.

On Tuesday, Brazilian President Luiz Inacio Lula da Silva called Trump to discuss trade, the economy, and the fight against organized crime.

Colombian stocks .COLCAP climbed 1.25% and have outperformed most peers, rising more than 52% so far this year. But the ongoing rally could be tested in the run-up to the 2026 elections, when Colombians will vote to choose President Gustavo Petro's successor.

The Chilean peso CLP= strengthened 0.6% against the dollar while equities .SPIPSA remained steady as investors awaited the Andean nation's presidential runoff in mid-December.

Argentina's S&P Merval index .MERV gained 0.1% for a sixth consecutive day of gains while the peso ARS= slipped 0.24%.

Separately, President Trump pardoned former Honduran President Juan Orlando Hernandez, who was released from a U.S. prison where he was serving a 45-year sentence on drug trafficking and firearms charges.

The release came days after a presidential election in the country, in which Trump backed the conservative National Party's candidate over the liberal candidate.

South African equities .JTOPI dropped 1.1% and the rand ZAR= edged down 0.2%. Economic growth in Africa's biggest economy slowed in the third quarter of 2025 as expected.

Saudi Arabia approved its state budget for 2026, forecasting a narrower fiscal deficit as it shifts spending to priority sectors in a push to increase non-oil revenue.