EMERGING MARKETS-LatAm stocks set for solid weekly gains; Peru, Chile soar on metal mania

By Twesha Dikshit

Dec 26 (Reuters) - Latin American equities were steady on Friday during a holiday shortened week but set for solid weekly gains as indexes in Peru and Chile benefited from surging metal prices, while the Honduran election outcome was also in focus.

A gauge tracking Latin American equities .MILAOOOOOPUS was flat on the day in a thin trading session, but set to post a weekly gain of over 1%.

Peru's benchmark stock index .MXNUAMPESCPGPE was a bright spot for the week, minting daily fresh record highs, buoyed by surging metal prices and on track to end with weekly gains of over 3%. Copper and gold are two of Peru's top exports.

Chile, also a copper exporter, saw its equities .SPIPSA add 0.9% while the peso CLP= dipped against the greenback.

Latin American markets have outperformed most developed markets this year, with equities up almost 46%, as investors sought to diversify from premium-priced U.S. equities and trade-related uncertainty.

A gauge tracking the region's currencies .MILA00000CUS ticked lower, but is set to post returns of over 25% for the year benefiting from a weaker dollar.

Still, analysts expect some volatility to creep up going into next year, with elections in many counties including Peru and Brazil.

"In our 2026 outlook, we highlighted the centrality of next year’s general election as a key risk to the macroeconomic and financial outlook, particularly for our monetary policy views," said J.P. Morgan analysts about Brazil's elections in a note last week.

Brazil's former President Jair Bolsonaro endorsed his son Flavio's 2026 presidential bid. The real BRL= dropped 0.5% against the dollar, while equities .BVSP recovered after sliding earlier in the session.

TRUMP-BACKED CANDIDATE DECLARED HONDURAN PRESIDENT

Nasry Asfura, the conservative candidate for Honduran president backed by U.S. President Donald Trump, was declared the winner on Wednesday, more than three weeks after the Nov. 30 election, which was beset by delays, technical problems and allegations of fraud.

The country's dollar bonds due 2030 were up 2 cents. Honduran hard-currency bonds are up 17% so far this year at the index level, edging the overall EMBIGD index by almost 3% YTD.

Trump had threatened to cut off U.S. financial support to Honduras if Asfura did not win and has backed conservative candidates in the region.

The U.S. administration's interest in the region has also involved rising tensions with Venezula that have put global markets on edge and led to concerns over oil supplies.

Washington ordered the U.S. military to enforce a "quarantine" of Venezuelan oil for at least the next two months, a U.S. official told Reuters on Wednesday.

In other moves, the Colombian peso COP= rallied 1% against the greenback and was set for a seventh straight day of gains.

Key Latin American stock indexes and currencies at 20:17 GMT: