EMERGING MARKETS-Argentine peso leads Latam FX higher; markets digest local, US data

By Pranav Kashyap

Feb 12 (Reuters) - Most Latin American currencies inched higher on Thursday as investors sifted through a busy week of local data and political headlines, developments that largely stole the spotlight from a surprisingly strong U.S. jobs report.

The Argentine peso ARS= jumped 1%, while Buenos Aires stocks .MERV climbed 0.5% after the Senate approved President Javier Milei's flagship labor reform bill, an important step forward for the libertarian leader's broader push to reshape the economy.

On a broader front, the MSCI index for Latin American equities .MILA00000PUS was flat, while the region's currency index .MILA00000CUS added 0.4%.

This week brought inflation prints from Mexico, Brazil, and Argentina. The results were mixed, but the takeaway for markets was the resilience in the region's economies, with nothing in the numbers setting off alarm bells.

That, coupled with a renewed "risk‑on" mood after the recent stumble in global tech stocks and an ongoing push by investors to diversify exposure, set the equity as well as the currency gauge on course for their eight straight weeks of gains.

Even a hotter-than-expected U.S. jobs report, one that pushed back expectations for Fed rate cuts in the next few months, failed to fully snuff out the broader "easing later on" narrative. That kept global risk assets supported, lifting sentiment well beyond Latin America, from South Korea to Hungary.

In Peru, stocks .MXNUAMPESCPGPE fell 0.7%, while the sol PEN= was flat in thin trade.

The central bank is expected to hold rates at 4.25%. Peru heads into the decision with inflation well contained through 2025, after a strong year in markets where the sol gained roughly 10%, while stocks surged 45%.

Brazil, meanwhile, is starting to show signs that its long-hot economy is finally cooling. Services activity fell more than expected in December, pressured by still-sky-high interest rates at 15%.

The real BRL= rose 0.4%, but stocks .BVSP fell 0.4%.

The currency remains an outperformer versus regional peers so far this year, but that edge could face a stress test as investors could start to position for the rate cycle to turn, helped by central bank signals and data that increasingly bolsters the case for eventual cuts.

After the Colombian peso COP= and local stocks .COLCAP ranked among Latin America's top performers in 2025, the market now has a new catalyst as Colombians head to the polls in May to choose President Gustavo Petro's successor.

"The peso has lagged regional FX this year, underperforming even lower‑carry currencies like Mexico and Chile, as rising political uncertainty weighs on Colombia's fiscal outlook," said Dev Ashish, Latin America economist at Societe Generale.

"Markets remain cautious given Petro's policy mix of higher public spending, broader wealth and corporate taxation, and wider fiscal deficits."

The peso was flat, while the Bogota stocks slipped 0.2%.

Further afield, Zambia's kwacha ZMW= touched its strongest level in more than two and a half years, albeit in thin volumes.

The move came after the country formally requested a new IMF program. A team from the lender is expected to visit February 25 to March 4, Zambia's treasury secretary told Reuters on Wednesday.

Key Latin American stock indexes and currencies: