EMERGING MARKETS-Latam FX, stocks edge higher as yields retreat

By Purvi Agarwal

Jan 14 (Reuters) - MSCI's indexes tracking Latin American currencies and stocks were higher on Tuesday, as U.S. Treasury yields retreated and the dollar steadied while investors continued to gauge the chances of Federal Reserve rate cuts and the likelihood of aggressive U.S. tariffs.

The MSCI gauge for Latin American currencies .MILA00000CUS was up 0.8% at 1530 GMT, eyeing its best day in over a week. The index measuring stocks in the region .MILA00000PUS was up 0.9%.

MSCI's index tracking overall EM stocks .MSCIEF was up 1.4%, on track for its best day since October.

Treasury bond yields eased and the dollar was steady after a report said that Trump's team was considering a gradual ramp-up in tariffs to avoid inflation spikes, and a cooler-than-expected producer prices report in the U.S.

That relieved some pressure on riskier EM assets which have been hit by the prospect of higher rates in the world's largest economy.

Most Latin American assets have been under additional pressure since the reelection of Donald Trump in November, as looming fears of tariffs and further inflation pressures bumped up the dollar.

"Trump's policies are going to result in higher Treasury yields and a stronger dollar, creating tighter financial conditions that will weigh on sentiment towards EM assets in general, said Guilia Bellicoso, market economist at Capital Economics, adding Mexico and China would be the hardest hit.

However, Mexican president Claudia Sheinbaum's intensified actions on immigration and tariffs have left open the possibility the impacts could be less severe than anticipated.

The Mexican peso MXN= strengthened 0.7% on the day, while its stock exchange .MXX was up 0.1%.

The Brazilian real BRL= gained 0.4% against the dollar.

Brazil's Bovespa .BVSP was down 0.1%. Homebuilder MRV MRVE.SA was the top gainer with a 2.3% rise after its fourth-quarter results.

"The weakness that we've seen (last year) was not only due to Trump, but also, for example, in Brazil, we've seen fiscal risks increase as the government has kept fiscal spending loose and that has worried investors," said Bellicoso.

Argentina's peso ARS= was range-bound ahead of a key domestic inflation report, that is expected to show a 2.75% rise in price pressures in December. The country's Merval stock exchange .MERV was up 1%.

U.S. consumer price data, due Wednesday, will be the next major data release that could direct the near-term path for EM assets.

Most other LatAm currencies were subdued against the greenback. The main stock index in Colombia .COLCAP was down 0.2% while Chile's .SPIPSA was up 0.7%.

Highlights:

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Key Latin American stock indexes and currencies at 1530 GMT:

(Reporting by Purvi Agarwal and Lisa Mattackal in Bengaluru)

((Purvi.Agarwal@thomsonreuters.com;))