EMERGING MARKETS-Latam shares slip, FX soften as investors weigh Brazil data, await Argentina print

By Pranav Kashyap

Feb 10 (Reuters) - Latin American markets were mixed on Tuesday as investors weighed a fresh inflation snapshot from Brazil and looked ahead to Argentina's report and an interest rate decision in Peru later this week.

A benchmark index for Latin American equities pulled back from a more than one-week peak .MILA00000PUS, slipping 0.6%, while a similar currency index .MILA00000CUS fell 0.4% as it came off its record high hit in the previous session.

In Brazil, the real BRL= eased 0.5% after inflation came in broadly as expected and stayed within the government's target band.

The currency has enjoyed a long stretch of "carry" appeal, buoyed by a lofty 15% policy rate through much of last year. But that advantage could be tested as the central bank has signaled it may begin cutting rates in March based on cues from data.

The country's finance minister has also said that he sees no reason for the real interest rate to continue rising.

Across the region, the macro picture is getting more nuanced. Mexico's inflation data suggests the economy is holding up, Brazil's numbers keep the door open for cuts, Colombia's inflation has ticked higher, while in Chile it has hit the lowest in over five years.

The year has started on a strong footing for local stocks. Bogota .COLCAP is up nearly 16% year-to-date, Brazil .BVSP has gained 15% and Mexico .MXX is up 11%. Currencies, by comparison, may still have some ground to cover. On Wall Street, the S&P 500 .SPX is up just 0.5% so far, while the dollar =USD is down 0.1%.

"Investors are going to start to be very picky and start looking to fundamentals in specific countries in the region," said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics.

"The market had a stellar 2025, but 2026 will be more selective; the performance is going to rotate rather than repeat, that's the story here," Abadia added.

All eyes will be on Argentina's inflation figures, expected to show prices rose 2.5% in January - slightly cooler than December, but still far hotter than anywhere else in the region.

The numbers could hand President Javier Milei another talking point as he argues that inflation is finally coming down from the double‑digit monthly pace seen at the start of his tenure over two years ago.

Stocks in Buenos Aires .MERV fell 0.9%, while the local peso ARS= jumped 1%, to hit a near three-month high.

Markets are also tracking the Senate's debate this week over Milei-backed labor reforms, alongside new rules designed to coax undeclared U.S. dollars held outside the financial system.

Chile's peso CLP= slipped from its highest level since September 2023, while stocks .SPIPSA dropped 1.4% as copper prices fell.

Elsewhere, Kenya's shilling KES= was flat as markets digested the central bank's move to cut the benchmark lending rate to 8.75% - its 10th straight rate cut to encourage lending in the private sector.

Key Latin American stock indexes and currencies: