EMERGING MARKETS-LatAm stocks eye strong weekly finish; Chile runoff in focus

By Niket Nishant

Dec 12 (Reuters) - Latin American stocks rose on Friday, eyeing a positive finish to a week dominated by monetary policy decisions, including a U.S. Federal Reserve interest rate cut, while investors braced for Chile's weekend presidential runoff.

Equities .SPIPSA in Chile, which is heading into the presidential runoff on Sunday, were poised to end the week with a gain of 1.7%. For the day, stocks were up 0.36%.

The peso CLP= edged 0.37% higher, extending its strong run. It was up 1.5% for the week so far.

Brazil's Bovespa index .BVSP gained 0.7% and the real BRL= was largely unchanged. Both assets were on pace for strong weekly advances.

The country's central bank left interest rates at a near-two-decade high on Wednesday, while maintaining a hawkish tone even as economic activity slows.

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

Peru's Lima Stock Exchange .MXNUAMPESCPGPE was 0.3% higher, while the currency 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.

GAUGE OF REGIONAL CURRENCIES FLAT

MSCI's index that tracks overall Latin American equities .MILA00000PUS added 0.2% and was up 1.2% week-to-date, while a gauge of regional currencies .MILA00000CUS was flat and stayed on pace for a benign weekly finish.

The weekly gains can largely be attributed to the much-anticipated Fed rate cut on Wednesday, accompanied by a policy outlook statement that was widely viewed as less hawkish.

The region is also on track for a strong finish to the year, in which assets have rallied despite political turbulence and trade tensions with Washington.

"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."

In Argentina, the Merval .MERV index slipped 0.2% and the peso ARS=RASL dipped 0.24%. 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.

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.

Mexico's main stock index .MXX led gains on Friday, climbing 2% to an all-time high. A Reuters poll showed that the country's central bank is expected to lower its key interest rate to 7% at its meeting on December 18, making its 13th cut since February 2024.

Mexican stocks were also among the top performers for the week, up 2.1%. The peso MXN= added 0.2% and advanced 0.8% week-to-date.

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 flattened, while the peso COP= slipped 0.13%.

Key Latin American stock indexes and currencies: