EMERGING MARKETS-LatAm assets start year firmer; investors weigh Venezuela overtures

By Niket Nishant

Jan 2 (Reuters) - Latin American stocks edged higher on Friday, kicking off the new year on a strong footing while investors kept a close watch on Venezuela after President Nicolas Maduro struck a more conciliatory tone toward U.S. President Donald Trump.

Escalating tensions between Washington and Caracas have posed a risk to the region since late last year, and have at times raised the specter of regional heavyweights such as Brazil and Mexico being pulled into the crossfire.

Against that backdrop, Maduro called Venezuela a "brother country" to the U.S., while proposing serious talks on fighting drug trafficking and offering U.S. companies access to Venezuelan oil.

Several of Venezuela's dollar-denominated bonds were up between 1 cent and 3 cents on the dollar, according to Tradeweb data. The country has been in default since 2017.

A de-escalation could give investors some reason to cheer, especially as they head into a year of unknowns. While risks related to elections are front and center, the region will also face tougher comparisons with 2025, when Latin American assets logged their strongest annual performance since 2009.

Geopolitical risks remain in focus across emerging markets. Ukraine's international bonds slipped after fresh tensions between Kyiv and Moscow dented hopes of an imminent ceasefire in the war triggered by Moscow's 2022 full-scale invasion.

"We see it as difficult for Ukraine's President Volodymyr Zelenskiy to sign any territorial concessions and are uncertain as to what is acceptable on the Russian side," said James Blanning, senior economist at Tellimer Research.

REAL LEADS LATAM FX

The MSCI index tracking Latin American equities .MILA00000PUS rose 0.4%, while the corresponding currency gauge .MILA00000CUS gained 0.5%.

Brazil's real BRL= strengthened 0.8% against the dollar, leading gains among currencies, while the stock benchmark .BVSP was flat.

The country's manufacturing purchasing managers' index, a measure of factory activity, came in at 47.6 for December, a reading Goldman Sachs economists described as "weak".

Chilean stocks .SPIPSA were flat following data that showed economic activity in November fell short of estimates.

In Argentina, the Merval index .MERV rose 1.5% and the peso ARS=RASL was down 0.5%. The peso has started trading under a new phase of the central bank's monetary program aimed at building international reserves.

Mexican equities .MXX rose 0.41%, while the peso MXN= rose 0.2% after closing out 2025 with the biggest annual gain since 1994.

Peru's Lima bourse .MXNUAMPESCPGPE rose 0.8%, helped by higher gold prices. Gold is one of the country's top exports.

Data released on Thursday also showed that consumer prices rose more than expected in December.

Key Latin American stock indexes and currencies: