EMERGING MARKETS-LatAm stocks, FX climb with focus on central bank decisions

By Twesha Dikshit and Niket Nishant

March 17 (Reuters) - Latin American stocks and currencies climbed on Tuesday, as markets awaited interest-rate decisions in Brazil and the U.S., while continuing to track the evolving situation in the Middle East.

Regional assets have kicked off the week on a calmer note despite lingering concerns about disruptions in the Strait of Hormuz, a vital artery for global oil flows, and little sign of easing in the U.S.-Israel war against Iran.

Israel said it had killed Iran's security chief, while a senior Iranian official said the new supreme leader had rejected de-escalation offers, demanding that Israel and the U.S. be "brought to their knees".

Brent crude futures LCOc1 were up more than 3%, with Iran's attacks on energy infrastructure in the region adding to supply concerns.

Within the emerging market universe, LatAm remained less vulnerable, with analysts highlighting that the region's distance from the conflict zone and its oil-exporting economies provide some security, compared to Asia and emerging Europe, which rely heavily on energy imports.

MSCI's gauge of Latin American equities .MILA00000PUS advanced 1.3%, while a similar gauge for currencies .MILA00000CUS rose 0.9%.

"Many LatAm stocks still trade below their usual relationship versus global industry peers and may have room to catch up if the global rotation towards EM continues," BofA Securities analysts said in a note.

Several central bank meetings will be in the spotlight this week, including those in Brazil and the U.S., as investors look to see how policymakers navigate interest-rate decisions amid expectations of a rise in inflation due to the oil surge.

Macquarie analysts said Brazil's Copom might cut the target rate this week by 25 basis points or not cut at all, a change from their initial expectations of a 50-bps cut.

"We still expect that some easing will take place in H1 2026 and H2 2026. That's because the administration of President Luiz Inacio 'Lula' da Silva has moved proactively to limit the domestic fuel price pass-through, as it remains wary of the inflationary and political consequences of higher motor fuel prices," they said in a note.

STOCKS HIGHER ACROSS THE BOARD

Brazil's benchmark index .BVSP gained 0.5%, while the real BRL= firmed 0.6% against the greenback. The central bank's interest rate decision this week will take place with two empty seats on its committee, people familiar with the matter said, due to tensions between the government and Senate leaders.

Mexican equities .MXX added 0.7%. Economy minister Marcelo Ebrard will meet U.S. Trade Representative Jamieson Greer on Wednesday to formally start the United States-Mexico-Canada (USMCA) trade deal review, Ebrard's office said.

Argentina's equity index .MERV rose 2.1%, while Chile's .SPIPSA edged 0.3% higher.

Peruvian equities .MXNUAMPESCPGPE were 0.2% higher, while the sol PEN= was flat. Prime Minister Denisse Miralles resigned just weeks ahead of general elections scheduled for April 12.

Meanwhile, Russia expressed unwavering solidarity with Cuba after U.S. President Donald Trump said he expected to have the honour of "taking Cuba."

Elsewhere in EM, bourses in Hungary .BUX, Poland .WIG20 and Turkey .XU100 added between 1.5% and 2%. Asian markets gained on AI-driven optimism, with indexes in Korea .KS11 and Taiwan .TWII closing up around 1.5% each.

Key Latin American stock indexes and currencies: