EMERGING MARKETS-Latam stocks, FX edge higher as investors weigh fragile Mideast truce

By Johann M Cherian

April 9 (Reuters) - Currencies and stocks across most Latin American markets edged higher on Thursday as investors weighed the likelihood of tensions between Israel and Lebanon jeopardizing a fragile truce in the Middle East.

MSCI's index tracking stocks in the region .MILA00000PUS edged up 1.14%, adding to Wednesday's nearly 4% surge after the United States and Iran announced a two-week pause to hostilities.

However, as officials from Tehran and Washington prepared for peace talks in Pakistan on Saturday, Israel bombed more targets in Lebanon, sending crude prices higher by 5% to $100 a barrel.

Many of the gains in equities were aided by Brazil's state-owned energy company Petrobras PETR4.SA that added 4%, tracking higher energy prices.

A regional currencies index .MILA00000CUS inched up 0.4% as the dollar found some footing after a slide in the previous session. Brazil's real BRL=, Mexico's peso MXN= edged up 0.5% and 0.3%, respectively, while Chile's peso CLP= was flat.

"Most (investors) are more in a wait-and-see environment, but there are tactical investors taking advantage of the valuation opportunities that they're seeing," Malcolm Dorson, head of EMs at Global X ETFs said while speaking about developing markets broadly.

Latin American equities had witnessed strong gains in 2025, with Colombia a standout.

MEXICO INFLATION DATA, COLOMBIA RATING DOWNGRADE IN FOCUS

Latest data across most emerging economies reflected that higher energy costs were filtering into consumer prices that could weigh on demand and complicate policymaking by central banks.

Data on Thursday showed Mexico's annual inflation rate accelerated in March, moving further away from the central bank's target range. Although the central bank's favored core inflation gauge eased. The local stocks index .MXX edged up 0.3%.

Meanwhile, Colombia's hard currency bonds CO318316023=, CO323989133= slipped about 0.9 cents on the dollar after credit ratings agency S&P downgraded the country's long-term foreign currency rating to "BB-" from "BB" due to increasing fiscal deficits.

The country has been facing a deterioration in its fiscal accounts, which forced the government to suspend a fiscal rule temporarily in June last year and raise its fiscal deficit target. Elections later in the year would be pivotal for the country according to investors.

The local COLCAP index .COLCAP fell 1.3%, while the peso COP= was steady.

"The market would read (a victory for the opposition) as extremely market positive because even though Colombia's had a run up in prices over the past year, it's still one of the cheapest markets in Latin America," Dorson said.

In Argentina, lawmakers approved a government-backed reform that aims to promote mining investment in glacier regions, a step that industry leaders have said will boost copper and lithium investment.

The local peso ARS=RASL was flat, while the MerVal index .MERV dropped 0.6%.

Elsewhere, Poland's zloty EURPLN= edged up 0.2% against the euro after the local central bank left interest rates unchanged as expected.

Governor Adam Glapinski said interest rates are likely to remain steady in the near future, with developments in the Middle East the main factor influencing the central bank’s decisions.

Key Latin American stock indexes and currencies at 15:26