EMERGING MARKETS-LatAm stocks find relief in US inflation data despite domestic risks

By Niket Nishant

Dec 18 (Reuters) - Latin American stocks advanced on Thursday, bouncing back from a near three-week low a day earlier as benign U.S. inflation figures offered some respite from domestic risks.

The MSCI index tracking Latin American equities .MILA00000PUS rose 0.2%, while a gauge of regional currencies .MILA00000CUS slipped 0.1%.

Investors in the region are facing a crowd of risks, including the Federal Reserve outlook, policy guidance from local central banks, political volatility and the flare-up in tensions between the U.S. and Venezuela.

Data on Thursday showed U.S. consumer prices increased less than expected in the year to November, which could strengthen the case for the Fed to pursue a dovish path.

U.S. rate cuts typically reduce the cost of financing for Latin American companies.

The next key catalyst is Mexico's central bank rate decision, where policymakers are widely expected to deliver another cut.

Mexican stocks .MXX were flat, while the peso MXN= was up 0.1% against the dollar. Economic activity was likely unchanged in November from a year earlier, a preliminary estimate from the national statistics agency showed.

ARGENTINA RATINGS UPGRADE LIFTS SENTIMENT

Argentine stocks .MERV rose 0.7%, leading gains among regional equities. S&P Global upgraded the country's long-term foreign currency sovereign credit rating on Wednesday, citing improved liquidity and easing economic vulnerabilities after midterm elections and lower inflation.

The peso ARS=RASL fell 0.2%, sliding for a third consecutive day.

In Brazil, the stock benchmark .BVSP was flat and the real BRL= fell 0.2%. The central bank on Thursday projected inflation softening in 2027, but still remaining above its target range.

Investors were also watching developments in Bolivia. The U.S. welcomed economic reforms announced by Bolivian President Rodrigo Paz on Thursday, saying the changes would encourage investment that could benefit both countries.

"For a country that even as recently as just six months ago was one of our leading candidates to default, Bolivia's bonds have seen a massive rally," said Stuart Culverhouse, chief economist and global head of fixed income research at Tellimer Research.

"Default concerns have receded as the election result promises a change of policy direction after 20 years of socialism."

The regional moves are also unfolding against a backdrop of rising tensions between Washington and Caracas. Venezuela on Wednesday requested that the United Nations Security Council meet to discuss "ongoing U.S. aggression" against the country.

Key Latin American stock indexes and currencies: