EMERGING MARKETS-LatAm assets set for weak finish to policy-heavy week; Brazil and Peru defy trend

By Niket Nishant

Dec 12 (Reuters) - Stock benchmarks in Brazil and Peru bucked weakness in Latin America on Friday, as regional assets looked set to end a week packed with monetary policy decisions on a softer note.

The region faces an uncertain finish to a strong year, in which assets have rallied despite political turbulence and trade tensions with Washington.

The Bovespa index .BVSP gained 0.5%, while Peru's Lima Stock Exchange .MXNUAMPESCPGPE was 0.7% higher.

"Some of the tailwinds the region has yet to exploit will carry over into 2026," said Geronimo Mansutti, senior LatAm credit analyst at Tellimer Research.

"The region's poor track record still argues for caution. Investors may see reason for hope in right-wing governments that have, or are likely to, take office in the short term in several countries across the region."

Equities .SPIPSA in Chile, which is heading into the presidential runoff on Sunday, were poised to end the week with gains of 1.3% if current levels hold throughout Friday's session.

The peso CLP= edged 0.1% higher, extending its strong run.

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MSCI's index tracking overall Latin American equities .MILA00000PUS fell 0.3%, while a gauge of regional currencies .MILA00000CUS was flat.

Argentina's Merval .MERV index gained 0.2% and the peso ARS=RASL dipped 0.2%. On Thursday, President Javier Milei's office said he had submitted a labor reform proposal to Congress to tackle excessive bureaucracy and a "rigid structure" that has held back formal job creation.

Peru's sol PEN= was 0.1% stronger against the dollar, following the central bank's decision to hold its benchmark interest rate at 4.25% on Thursday.

Elevated rates tend to boost the appeal of local currencies, as foreign investors hunt for high-yielding alternatives to the dollar.

Investors were also monitoring tensions between Washington and Caracas, after Reuters reported the U.S. is preparing to intercept more ships transporting Venezuelan oil following the seizure of a tanker this week.

Colombian President Gustavo Petro said the seizure amounted to "oil piracy," potentially escalating tensions with U.S. President Donald Trump, with whom he has repeatedly clashed this year.

Colombian equities .COLCAP slipped 0.3%, while the peso COP= was largely unchanged.

Key Latin American stock indexes and currencies: