EMERGING MARKETS-Latam stocks dip as escalating Iran war weighs on sentiment

By Twesha Dikshit

March 18 (Reuters) - Latin American stocks and currencies dipped on Wednesday as escalating tensions in the Middle East disrupted regional energy infrastructure and sent oil prices surging, while investors assessed U.S. inflation data ahead of a Federal Reserve rate decision.

Iran's huge Pars gas field was hit in the first reported strikes on Iranian energy infrastructure, which prompted Tehran to warn its neighbors to evacuate their energy installations.

Brent crude prices jumped over 4% following the attack as Iran's Revolutionary Guards threatened energy facilities across Saudi Arabia, UAE and Qatar in retaliation.

The conflict in the Middle East has disrupted energy supply and shipping access globally, with the vital waterway Strait of Hormuz remaining closed, raising concerns over the impact on inflation and prompting central banks to navigate the uncertainty in upcoming policy decisions.

Still, not all EM regions have been impacted in a similar fashion, with oil exporting nations, particularly in Latam, faring much better than Asian and European nations reliant on energy imports.

"We are operating in a new environment, where macroeconomic concerns are elevated. Things like tariff policy can have a big impact on certain emerging market countries and ditto with geopolitical conflicts," said George Schultze, founder of Schultze Asset Management.

"With the war in the Middle East, certain countries are much more impacted because they don't have the ability to produce their own energy."

The MSCI index of Latin American stocks .MILA00000PUS fell 0.3%, while a corresponding one for currencies .MILA00000CUS was little changed against a stronger dollar.

Meanwhile, the U.S. issued a general license authorizing certain deals involving Venezuela's state oil company PDVSA, a notice on the U.S. Treasury Department website showed.

Both Venezuelan sovereign and PDVSA bond prices jumped to their highest level since the country defaulted in 2016. Venezuela's 2031 issue USP17625AD98=TE rose 2.6 cents to 50 cents on the dollar, while PDVSA's 2024 bond USP7807HAT25=TE jumped 2.1% to 35.8 cents.

MARKETS MIXED AS RISK-OFF WEIGHS ON METALS, LIFTS US DOLLAR

Central bank data showed Chile's economy grew more slowly in 2025 than in the previous year, despite returning to growth in the fourth quarter. The benchmark index .SPIPSA was down marginally, while the peso CLP= fell 0.7% as a sharp drop in copper weighed on the exporter.

Stocks in Mexico .MXX dipped 0.3%, while gold-exporting Peru's .MXNUAMPESCPGPE fell 1.8% tracking the dip in precious metals. Both the Brazilian real BRL= and the Peruvian sol PEN= ticked lower.

Equity indexes in Argentina .MERV and Colombia .COLCAP were the outliers, gaining 0.9% and 0.3%, respectively.

Colombia imposed 35% tariffs on imports of 14 steel and metalworking products from countries with which it does not have free-trade agreements on threats of unfair competition.

Elsewhere in EM, Middle East bourses were mixed, with Egypt's .EGX30 advancing 3.4% while Qatar's .QSI dropped 1%. Gold and platinum exporter South Africa's blue-chip index .JTOPI fell 3.6% despite better-than-expected retail sales and inflation data.

Asian markets closed higher boosted by AI driven optimism with tech-heavy indexes in Korea .KS11 and Taiwan .TWII jumping 5% and 1.5%.

Key Latin American stock indexes and currencies at 1505 GMT: