EMERGING MARKETS-Brazil leads LatAm stocks higher after cooler inflation data

By Niket Nishant

Dec 23 (Reuters) - Latin American stocks rose on Tuesday after a new set of mild inflation data boosted expectations of policy easing next year, even as currencies remained trapped within tight ranges following the U.S. GDP data.

The MSCI index that tracks equities .MILA00000PUS rose 0.3%, with Brazil's Bovespa .BVSP leading with a 0.7% gain.

Consumer prices in Latin America's largest economy rose 4.41% in the 12 months through mid-December, slower than the 4.43% figure economists polled by Reuters had expected.

Mexican equities .MXX rose 0.3% and were headed for their fourth straight day of gains. The annual inflation rate hit 3.72% in the first half of December, below estimates of 3.85%, data showed.

The inflation prints could strengthen the case for Latin American stocks as a bright spot among emerging markets, especially as investors hunt for alternatives to U.S. equities.

CHILE STOCKS TAKE A BREATHER

In Chile, the stock rally paused after three consecutive sessions of gains, with the benchmark index .SPIPSA down 0.1%. Investors are keeping a keen eye on the country after it elected right-wing candidate Jose Antonio Kast as its president earlier this month.

"Kast will enter office with a slew of economic pressures in his inbox: slow growth, weak investment, stagnant productivity, high inequality, limited social mobility and regional gaps," strategists at think tank Atlantic Council said.

Argentine stocks .MERV were also steady, with few fresh catalysts, after losing nearly 1% in the last two sessions.

CURRENCIES UNDER PRESSURE

MSCI's currency gauge .MILA00000CUS was flat, with the dollar paring losses after data showed that the U.S. economy grew faster than expected in the third quarter, driven by robust consumer spending.

Traders assigned a 15% chance of the first rate reduction in the U.S. coming as early as January, down from 18% before, according to LSEG data.

Reduced odds of a rate cut by the Federal Reserve keep dollar losses in check and limit demand for high-yielding emerging market currencies.

Investors are also contending with potential for escalated tensions between the U.S. and Venezuela after President Donald Trump said on Monday it would be "smart" for Venezuelan President Nicolas Maduro to leave power.

Key Latin American stock indexes and currencies: