EMERGING MARKETS-LatAm stocks, FX perk up on Mideast hopes; Peru faces election probe

By Johann M Cherian

April 24 (Reuters) - Currencies and stocks of most major Latin American economies inched higher on Friday as investors were hopeful of an imminent end to the conflict in the Middle East, while also monitoring electoral developments in Peru.

Global markets have been fraught with volatility this week as investors were initially hopeful that a peace deal could be reached between Iran and the U.S., only to be disappointed that no peace talks were held, even as the ceasefire between all adversaries was extended.

The latest development was Iranian Foreign Minister Abbas Araqchi heading for Islamabad, the venue for past peace talks with the United States, although there were no clear signs that it could make way for a deal.

Crude prices, a key driver for markets, wavered and were last at $105 a barrel as shipments through the strategic Strait of Hormuz remained thin.

In Latin America, Brazil's real BRL= led gains with a 0.3% rise, while Chile's peso CLP= firmed 0.2% and the pesos of Colombia COP= and Mexico MXN= were steady.

Despite Friday's gains, MSCI's broader LatAm currencies index .MILA00000CUS was on track for weekly declines - its first since the first week of March - as investors flocked to the safe-haven dollar.

ELECTORAL JITTERS IN PERU

Peru's former chief electoral official, who resigned this week amid mounting criticism over delays in counting votes from the April 12 general election, is now under investigation as part of a broader probe into alleged electoral irregularities, with police raiding his home to collect evidence.

The sol PEN= was steady but on track for its second straight week in the red, as investors weighed what the investigation could mean for the election results now expected in May.

Conservative candidate Keiko Fujimori currently leads, with left‑wing lawmaker Roberto Sanchez and former Lima mayor Rafael Lopez Aliaga in a tight race for second place. A run-off is anticipated in June.

MSCI's index tracking Peruvian equities .MIPE00000PUS edged up 0.4% on Friday but was on track for its second straight week of losses, while international bonds maturing next year US715638BU55=TE were set for their third straight week of declines.

Colombia and Brazil are also headed for elections later this year, which investors say are pivotal for the two countries.

"We expect the U.S. to continue strengthening its ties in Latin America to bolster its geopolitical influence," said Gillian Edgeworth, fixed-income portfolio manager at Wellington Management, while also adding that some countries in the region could benefit from higher commodity prices due to the Middle East conflict.

Meanwhile, data showed that Mexico's economic activity expanded slightly in February but missed expectations, extending its rough patch since the start of the year.

Uncertainty prevails over the central bank's next policy move alongside the outcome of United States-Mexico-Canada Agreement negotiations expected to start next month.

"There is progress in the review, but the process is unlikely to be smooth. Recent headlines suggest Mexico will continue facing unilateral tariffs in the auto, steel, and aluminum industries despite reaching a deal," Citigroup economists said in a note.

The country's equities index .MXX gained 0.9% on Friday, while benchmarks in Chile .SPIPSA and Argentina .MERV were up 1.2% and 0.4%, respectively.

A key event next week will be an interest rate decision in Brazil, with economists projecting a cut by a quarter of a percentage point. The Bovespa index .BVSP slipped 0.6% on Friday and is on track for weekly losses.

Key Latin American stock indexes and currencies at 15:18 GMT: