EMERGING MARKETS-LatAm assets hold steady as geopolitical jitters curb risk, local data parsed

By Twesha Dikshit and Pranav Kashyap

Jan 8 (Reuters) - Latin American assets were largely steady on Thursday, with risk appetite capped by rising geopolitical tensions, while investors sifted through local economic data and awaited key U.S. data that could reshape expectations for the Fed's next move.

The U.S. Senate voted to advance a resolution that would curb President Donald Trump's ability to take further military action against Venezuela without congressional approval, moving to rein in the White House just as Trump suggested U.S. oversight of the crisis-hit nation could stretch on for years.

Venezuelan sovereign debt, meanwhile, gave back part of its recent rally after the U.S. capture of President Nicolas Maduro. Government bonds slipped by as much as 2.5 cents, with bids in the 31.6 - 40.7 cent range.

Investors, however, remained bullish on Latin American assets, expecting U.S. moves to aid a rightward shift in the region during a crucial election year that could lead to market-friendly reforms.

DOMESTIC DATA IN FOCUS

Latin America's early-year optimism stumbled as the global risk rally hit a speed bump, with investors pausing to reassess economic health amid fresh data and geopolitical jitters, with Trump's surprise move to tighten his grip on Venezuela adding a layer of uncertainty to emerging markets.

MSCI's Latin American equities index .MILA00000PUS was up 0.1%, while the corresponding currency gauge .MILA00000CUS was little changed.

Adding to the tension, French President Emmanuel Macron said that France would vote against signing the long-delayed free trade agreement with the Mercosur bloc on Friday, a setback for South America's trade ambitions.

Mexican equities .MXX and the peso MXN= were largely steady after data from INEGI showed headline inflation slowed more than expected in December, with consumer prices rising just 0.28%.

"While the easing in price pressures last month leaves the door open to a (rate) cut in February, we think it's more likely that the central bank will opt for a pause next month," said Kimberley Sperrfechter, emerging markets economist at Capital Economics.

Brazil, the region's heavyweight, saw industrial output flat in November as steep borrowing costs continued to choke activity.

Brazil's main equity index .BVSP rose 0.3% while the real BRL= was flat.

A Reuters poll suggests annual inflation there likely cooled into the central bank's target range, a development that could embolden President Lula da Silva to renew his push for rate cuts when official data lands Friday.

Meanwhile in Chile, consumer prices fell slightly more than expected in December.

The peso CLP= was steady, while equities .SPIPSA ticked up 0.3%.

Argentina's benchmark equities index .MERV gained 0.7%. Fresh data showed industrial output fell 8.7% in November.

The Colombian peso COP= climbed 1.2% as investors tracked signs of progress toward a potential White House meeting between President Donald Trump and Colombia's President Gustavo Petro. Trump said arrangements were underway for the talks to go ahead.

Key Latin American stock indexes and currencies: