EMERGING MARKETS-Chilean assets pause after election rally; dollar lifts LatAm currencies

By Niket Nishant

Dec 15 (Reuters) - Chilean assets took a breather as investors booked profits after a strong rally last week in the lead-up to the presidential run-off while a weakening U.S. dollar boosted Latin American currencies.

The stocks benchmark in Chile .SPIPSA slipped 0.6% on Monday after gaining 1.7% last week while the peso CLP= fell 0.4%.

The pullback suggests markets may have priced in much of the good news, leaving Chilean assets more sensitive to how post-election reforms and fiscal plans unfold after Jose Antonio Kast's victory.

"Kast's victory is going to be a boost for entrepreneurs. But I don't expect radical reforms unless he really forms a strong coalition," said Debora Reyna Garcia, LatAm economist at Oxford Economics.

The MSCI index that tracks overall Latin American equities .MILA00000PUS added 0.6% while a gauge of regional currencies .MILA00000CUS was up 0.3%.

The dollar index =USD, which measures the U.S. currency against six others, was down 0.22%. A weaker dollar tends to boost the appeal of high-yielding currencies in Latin America.

DIVERGENCE ACROSS REGIONAL ASSETS

Elsewhere in the region, Brazilian stocks .BVSP rose 0.8% and were on track for a fourth straight day of gains.

The IBC-Br economic activity index, a proxy for gross domestic product, fell more than expected in October.

Any weakness could boost the case for interest rate cuts by the central bank after it held rates for a fourth consecutive meeting last week and stuck to its hawkish stance.

The Mexican peso MXN= was up 0.1% against the dollar. Private sector analysts polled by Mexico's central bank expect the currency to close the year stronger than their previous estimate.

"Mexico is well-positioned for a modest rebound in 2026, with low effective tariff rates and potential for further central bank easing," Vanguard analysts wrote in a note.

The country also opened an anti-dumping and anti-subsidy investigation into U.S. pork leg and shoulder imports after domestic producers alleged unfair pricing. Stocks .MXX were up 0.4%.

Peru's Lima stock exchange .MXNUAMPESCPGPE was up 0.1% as data showed that the economy expanded 3.6% year on year in October. The sol PEN= was flat.

Key Latin American stock indexes and currencies: