EMERGING MARKETS-LatAm assets tick up with Colombia and Chile in focus

By Niket Nishant and Twesha Dikshit

Dec 19 (Reuters) - Latin American assets edged higher on Friday, led by gains in Chilean equities aided by copper prices, while investors assessed geopolitical tensions and Colombia's central bank kept rates steady as widely expected.

The Colombian peso COP= rose 0.8% against the dollar. The central bank voted to keep rates on hold at 9.25% at its last meeting of the year, amid concerns over inflationary pressure.

The Colombian stock benchmark .COLCAP inched 0.6% higher, but was on track for its biggest weekly loss since May. The Latin American nation conducted a direct sale of local TES bonds worth 23 trillion pesos ($5.94 billion) with a foreign investor, the finance ministry said.

Meanwhile, Colombia's government will present an economic emergency decree on Friday aimed at raising about 16 trillion pesos ($4.13 billion) to finance some of the spending needs in the 2026 budget, the finance minister said.

Both the MSCI index tracking regional currencies .MILA00000CUS and the corresponding equities gauge .MILA00000PUS added 0.2% each.

The moves cap a volatile week for markets, which were buffeted by a heavy slate of monetary policy decisions and domestic political factors. Still, EM assets were set to end the year having outperformed many domestic markets, aided by a weaker dollar and diversification from the U.S.

"We believe a weaker USD, coupled with a renewed rate-cutting cycle by the Fed, should serve as powerful tailwinds for EM fixed income, supporting flows back into the asset class after three years of record outflows," said Gorky Urquieta, co-head of the emerging markets debt team at Neuberger Berman.

Tensions between the U.S. and Venezuela loom over the region. Regional heavyweights Brazil and Mexico have called for restraint, but their stance risks stoking Washington's ire.

POLITICS, ECONOMIC DATA DRIVE SENTIMENT

In Brazil, domestic political risks have come to the fore in recent weeks. President Luiz Inacio Lula da Silva said on Thursday he was "sensing" that interest rates could start to come down soon, but central bank chief Gabriel Galipolo said policymakers would stick to a data-dependent approach.

The real BRL= dipped 0.1% on Friday. The Bovespa index .BVSP gained 0.5% on Friday, after data showed that foreign direct investment inflows beat expectations in November.

Chilean stocks jumped 1.1%, thanks in part to the price of copper rallying to a near record high. The metal, widely used in power, construction and manufacturing, is Chile's top export.

"Sentiment on Argentinian assets remains constructive, while Chile continues to be the preferred Andean market. However, copper prices remain the main risk for the region," analysts at BofA Global Research wrote in a note.

Peru's central bank slightly raised its economic growth forecasts for 2026, taking into account the likely impacts of the country's upcoming presidential elections in April next year. Equities .MXNUAMPESCPGPE gained 1%.

Meanwhile, Mexico's stock benchmark .MXX rose 0.5% while the local peso MXN= was little unchanged. The central bank lowered interest rates by 25 basis points on Thursday.

Key Latin American stock indexes and currencies at 1946 GMT: