EMERGING MARKETS-LatAm stocks rebound after  US inflation data; Argentinian equities soar

By Niket Nishant and Twesha Dikshit

Dec 18 (Reuters) - Latin American stocks advanced on Thursday, bouncing back from a near three-week low a day earlier, with investor sentiment boosted by benign U.S. inflation figures while investors assessed a slew of updates in Argentina and Mexico.

The MSCI index tracking Latin American equities .MILA00000PUS rose 1.1%, while a gauge of regional currencies .MILA00000CUS was little changed.

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 Bank of Mexico lowered its benchmark interest rate by 25 basis points on Thursday as widely expected, bringing interest rates down to 7%, the lowest level since before May 2022.

Mexican stocks .MXX added 1.9%, while the peso MXN= was flat against the dollar. Economic activity was likely unchanged in November from a year earlier, a preliminary estimate from the national statistics agency showed.

"With inflation to stay within the central bank's target range next year and GDP growth likely to disappoint expectations, we think the easing cycle will continue, but that it will be more stop-start," said Liam Peach, senior emerging markets economist at Capital Economics in a note.

ARGENTINA RATINGS UPGRADE LIFTS SENTIMENT

Argentine stocks .MERV jumped 4.2%. 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.

Other data indicators showed the country's unemployment rate dropped to 6.6% for the third quarter, while the trade surplus came in at $2.5 billion for November.

Analysts polled by Reuters had expected a $869 million surplus.

In Brazil, the stock benchmark .BVSP rose 0.3%. 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."

UKRAINE DEALS GET GO-AHEAD

Elsewhere, Ukraine clinched a long-awaited deal to restructure $2.6 billion of growth-linked debt on Thursday, with creditors overwhelmingly accepting a bonds-and-cash swap offer, that could allow the country to emerge from sovereign default.

The Ukraine-U.S. reconstruction fund, a part of the minerals deal signed by the two countries in April, approved its asset policies and is set to review its first investment opportunities in 2026, the U.S. government body overseeing the fund said.

Key Latin American stock indexes and currencies: