EMERGING MARKETS-LatAm assets mixed as Middle East uncertainty lingers

By Johann M Cherian and Niket Nishant

March 24 (Reuters) - Latin American stocks inched up on Tuesday, while currencies were subdued, as contrary signals from the U.S. and Iran on potential negotiations to end the conflict in the Middle East kept traders on edge.

MSCI's index tracking equities in the region .MILA00000PUS rose 0.6%. Individual bourses in the region were volatile, with net-oil-importer Chile .SPIPSA down 0.6%, and Brazilian .BVSP and Peruvian equities .MXNUAMPESCPGPE up 0.1% and 0.8%, respectively.

U.S. President Donald Trump told reporters that the administration was talking to "the right people" in Iran to reach an agreement to end hostilities. However, Iran has previously denied that negotiations are taking place, keeping investors skeptical.

Prices of crude oil, a key resource for developing economies, were last up 3.5% at $103.47 a barrel.

"The longer oil prices stay high, the longer central banks will feel obligated to sound as if they will tighten policy," said Thierry Wizman, global FX & rates strategist at Macquarie Group.

ENERGY COSTS COMPLICATE POLICY-MAKING

Chile is seen to be among the most vulnerable to surging energy costs in the region and when it is also grappling with strained public finances.

Fuel prices are expected to spike in the coming days after the government invoked a clause in its fuel stabilization mechanism to rapidly align with surging international prices.

The peso CLP= lost 0.9% against the dollar. It is among the top losers in the region this month.

The local central bank is due to announce its verdict on monetary policy later in the day. Economists polled by Reuters anticipate no change to the rate at 4.5%, although greater scrutiny will be on the policymakers' outlook.

More broadly, the MSCI currencies gauge .MILA00000CUS ticked 0.1% lower versus the dollar. The greenback is perceived to be a safe-haven since the U.S. is a net exporter of oil.

Meanwhile, data in Mexico showed the annual inflation rate accelerated in the first half of March to levels not seen since late 2024, backing expectations that the central bank will keep its interest rate unchanged at its meeting this week.

"The bigger picture is that consumption remains resilient, but momentum will start to fade," said Andres Abadia, chief LatAm economist at Pantheon Macroeconomics.

The benchmark stock index .MXX was up 2.1%, while the peso MXN= was steady.

Brazil's central bank had lowered its benchmark interest rates by 25 basis points last week, although minutes from the meeting showed inflation worries could put it on a tighter policy path up ahead.

Bucking the trend, Bolivia's bond maturing in 2030 USP37878AE81=TE added over 1.8 cents on the dollar after ratings agency S&P Global raised its credit rating with a stable outlook, citing lower debt-service obligations.

Elsewhere, Reuters reported that South Korea's state-run pension fund is conducting strategic foreign exchange hedging operations, supplying dollars in the market as the won wallows near 17-year lows. The won KRW= was last at 1,500 per dollar.