EMERGING MARKETS-LatAm FX higher, stocks jump as risk sentiment improves after metals rout

By Purvi Agarwal

Feb 3 (Reuters) - Most Latin American currencies strengthened against the U.S. dollar on Tuesday, after three sessions of declines, and stocks rebounded as the sell-off in commodities eased, reviving risk appetite for EM assets.

MSCI's index tracking LatAm stocks .MILA00000PUS jumped 3.3%, set for its biggest one-day jump since March, while the currencies gauge .MILA00000CUS inched 0.6% higher.

Gold surged more than 5%, on track for its biggest daily gain since November 2008, and silver jumped as the precious metals staged a comeback from their steepest two-day drop in decades.

Heavyweight Brazilian stocks .BVSP gained 2.3% to a record, with miner Vale VALE3.SA up 3.5%.

The real BRL= was up 0.8%, after minutes from the central bank's latest meeting showed it signaled monetary policy easing from March but stressed that borrowing costs must remain restrictive.

Chile's peso CLP= appreciated 0.4% and stocks .SPIPSA were 1.2% higher as prices of copper recovered after news that China was planning to boost stockpiles of the red metal. MET/L

The Mexican peso MXN= climbed 0.7%, while stocks .MXX advanced 2.1%, on track for their biggest one-day climb since May.

SUPPORTIVE MACRO BACKDROP

After a stellar rally last year, stocks in emerging markets have continued to make gains at the start of 2026 on a weaker dollar and as investors diversify from the U.S.

"After a transformative 2025, resilience amid geopolitical and policy risks have been underpinned by attractive valuations, improving fundamentals, and a supportive macro backdrop," said Gabriel Sacks, investment director of Asian equities, at Aberdeen Investments.

"Global capex, favorable FX trends, and structural themes position EMs well (this year)."

Colombia's currency COP= bucked the trend, down 0.4%. However, local stocks .COLCAP gained more than 1% as oil prices stabilized following a 4% drop in the previous session.

U.S. President Donald Trump's nomination of former Federal Reserve governor Kevin Warsh on Friday supported the dollar index =USD, which pressured commodities. However, the greenback stabilized on Tuesday, with trading largely muted.

Meanwhile, JPMorgan is finalizing plans for a new index to track frontier market local currency bonds, investors consulted on the details told Reuters, as the bank looks to satisfy a growing appetite for riskier and more diversified high-yield debt.

The proposed index could include 20 to 25 countries, with Egypt, Vietnam and Kenya, among others, having the largest weightings.

Elsewhere in EMs, Ukraine's government bonds rallied as much as 1.5 cents on the dollar as hopes for a ceasefire in the nearly four-year-long war with Russia continued to build.

A Financial Times report said Ukraine had agreed with Western partners that any persistent Russian violations of a future ceasefire would trigger a co-ordinated, multi-tiered military response.

Key Latin American stock indexes and currencies: