EMERGING MARKETS-LatAm FX mixed, stocks down as risk appetite wanes; assets set for monthly gains

By Pranav Kashyap and Purvi Agarwal

Feb 27 (Reuters) - Latin American currencies were mixed on Friday while stocks moved broadly lower as risk appetite waned globally, though MSCI's indexes tracking both assets were poised for monthly gains.

The currencies index for the region .MILA00000CUS was little changed, set for its seventh month of gains, its longest monthly winning streak since 2009.

The stocks gauge .MILA00000PUS was on track to end its second straight month in the green.

However, the equity gauge was up only about 4% this month, after surging 15% in January, while the currencies index gained roughly 2%, compared with the previous month's 5% advance.

Brazil's real BRL= reversed declines to inch 0.1% higher. Data showed annual inflation cooled to 4.1%, from 4.5% in January, but was above the 3.8% expected by analysts.

However, the print is not expected to prevent the country's central bank from kicking off a monetary policy easing cycle in March, as indicated by policymakers recently.

This would be the central bank's first interest rate cut since 2024 if the expectations come true, bringing the Selic rate down from a near two-decade high of 15%.

"Although this reading doesn't show a worsening in inflation year-on-year, it certainly shows that stickiness may be higher in services and core measures, in line with our scenario," said Citigroup analysts led by Ernesto Revilla.

"This data strengthens our more hawkish monetary policy call of a 25-basis-point cut in the March meeting."

EQUITIES DIP SLIGHTLY

Most equities in the region were lower on the day as global risk appetite faltered.

Sao Paulo stocks .BVSP fell 1.2%, with some financial firms including Itau Unibanco ITUB4.SA falling 2%, tracking declines in global financial stocks.

Mexican stocks .MXX were the only outliers, up 0.4%.

AI chipmaker Nvidia's results on Wednesday failed to provide the boost some investors had bet on, with doubts on the AI-fueled rally and stretched tech valuations taking center stage.

Colombian equities .COLCAP sank 0.8%, setting them up for their worst week since March 2023. The index has shed nearly 7% over the last three sessions as trade tensions with Ecuador intensify.

Elsewhere, Chilean stocks .SPIPSA slipped 1.6% and were set to break a half-year monthly winning streak, while the peso CLP= fell 0.7%. The local unemployment rate rose to 8.3% in the quarter through January.

February has been a data-heavy month across the region. Data showed convincing signs that Brazil's economy is cooling, while Mexico, Colombia and Argentina are gaining momentum. That divergence is starting to show up in policy paths, offering different carry-trade benefits.

Meanwhile, Argentina's stock index .MERV slumped 4%, set for its biggest monthly fall in two years. It was largely weighed down by oil firm YPF YPFDm.BA, which fell 4.6% despite projecting a higher EBITDA in 2026.

Key Latin American stock indexes and currencies: