EMERGING MARKETS-LatAm assets gain on weaker dollar, precious metals safe-haven rally

By Twesha Dikshit

Jan 19 (Reuters) - LatAm currencies rose on Monday with investors monitoring escalating geopolitical tensions after U.S. President Donald Trump threatened fresh levies on Europe, sending the dollar lower while precious metals rallied on safe-haven demand, aiding the resource-rich region.

Trump vowed to implement a wave of increasing tariffs from February 1 on some European nations until the U.S. was allowed to buy Greenland. EU leaders said they would retaliate against the measures, decrying the move as blackmail.

MSCI's Latin American equities index .MILA00000PUS was up 0.2%, while a similar gauge for currencies .MILA00000CUS added 0.4%. Both had ended last week higher with currencies trading close to record highs touched last week.

Markets have started the year navigating a challenging geopolitical landscape, with intensifying tensions across Venezuela, Iran and Greenland adding to uncertainty. LatAm faces its own test later in the year with countries including Brazil, Peru and Colombia holding polls to elect new leaders.

Meanwhile, top EU officials and the South American bloc Mercosur signed a free trade agreement on Saturday designed to lower tariffs and boost trade between the two regions.

The deal, which has faced criticism and protests from farmers in Europe, must now gain the consent of the European Parliament and be ratified by the legislatures of Mercosur's Argentina, Brazil, Paraguay and Uruguay.

"We believe that Argentina and Uruguay, while currently benefiting from their roles as key food and energy providers in a disruptive global environment, face increasing risks from a potential shift towards a more unilateral international order," Citi analysts said.

Most stock indexes in the region were flat to lower on the day, with Mexico's .MXX down 0.4%. A Reuters poll of economists expects the nation's economy to be on a slow track this year amid high uncertainty over the future of the USMCA trade deal with the U.S. and Canada.

Indexes in copper-exporter Peru .MXNUAMPESCPGPE, Brazil .BVSP and Chile .SPISA were little changed. Argentina's benchmark index .MERV fell the most at 0.5%.

Brazil's Finance Minister Fernando Haddad said on Monday that central bank Governor Gabriel Galipolo inherited issues from his predecessor including those tied to the recently liquidated lender Banco Master.

Colombia's equities .COLCAP were the only bright spot, adding 0.2% while the peso COP= strengthened 0.8% against the greenback. The Chilean peso CLP= fell 0.3%. Wildfires blazed in the country, leaving many dead with the government carrying out mass evacuations.

Other regional currencies traded in a tight range with U.S. markets closed for a national holiday.

JPMorgan cut its view on emerging market currencies to 'market weight' from 'overweight' saying short-term positioning was "overbought" following a year-long rally.

Key Latin American stock indexes and currencies at 15:11 GMT: