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Brazil inflation rises in July

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Peruvian sol falls after surprise rate cut

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Argentina's Merval leads weekly gains in Latam

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Stocks up 2.5%, FX up 1.5%

(Updated at 4:00 p.m. ET/ 2000 GMT)

By Lisa Pauline Mattackal and Ankika Biswas

Aug 9 (Reuters) - Latin American stocks rose on Friday,

continuing a strong run for risky emerging markets on easing

worries about U.S. economic growth, while Brazil's real gained

in a mixed session for currencies after the country's strong

inflation figures.

MSCI's Latin American stocks index leapt

2.5% and the regional currency index gained

1.5%, with both hitting near three-week highs.

The indexes were headed for their first weekly advance in

four, sharply recovering from a heavy selloff at the week's

start sparked by U.S. recession fears. While the currencies

index was on track for its best week since March 2023, the share

index was poised for its biggest weekly gain since October.

Both have outperformed the broader emerging markets stocks

and currency indexes for the week.

Brazil's real rose 0.7% to a three-week high against the

dollar after consumer prices came in slightly above

expectations in July, adding to policy uncertainties after the

central bank said it would raise interest rates if needed to

control inflation.

The Chilean peso rose 0.4%, hitting an over

one-week high, tracking a rebound in

copper prices, while Peru's sol lost 0.4% after an

unexpected interest rate cut on Thursday.

"We continue to see additional room for cuts (for Peru) this

year, particularly after Fed cuts materialize, but expect

upcoming decisions to be more CPI dependent, even if space is

tight for easing," Citi analysts wrote.

Among the top Latam currency laggards for the week,

Colombia's peso eased from the over one-week high hit in

early trade to slip 0.3%.

Meanwhile, Mexico's peso was flat after its central

bank cut interest rates on Thursday but signaled it expected

higher inflation.

"The balance of risks did not change. We continue to

forecast three additional 25bp rate cuts until the end of 2024,"

economists at Goldman Sachs said in a note.

Mexico's peso was among the worst-hit currencies at the

start of a turbulent week that in response to some poor U.S.

economic data that deepened worries about slowing global growth

and sparked a massive unwinding of yen-funded carry trades.

U.S. jobless claims data on Thursday helped risk assets

recover, while stronger China inflation data also helped soothe

worries about deflation in the world's second largest economy.

On the stocks front, Argentina's benchmark stock index

was on track to emerge as the top weekly gainer among

its Latam peers, last up nearly 11% for the week.

Emerging market equities have seen inflows of $2.3

billion over the past 10 weeks, according to data from Bank of

America Global Research. However, EM debt has seen outflows for

the past two weeks.

Key Latin American stock indexes and currencies at 2000 GMT:

MSCI Emerging Markets 1063.28 1.62

MSCI LatAm 2244.09 2.48

Brazil Bovespa 130455.46 1.39

Mexico IPC 53075.56 0.38

Chile IPSA 6329.55 0.57

Argentina Merval 1579054.76 3.182

Colombia COLCAP 1310.36 0.86

Brazil real 5.5102 0.7

Mexico peso 18.869 -0.05

Chile peso 931.7 0.37

Colombia peso 4069.43 -0.26

Peru sol 3.7232 -0.38

Argentina peso (interbank) 936.5 0

Argentina peso (parallel) 1335 2.996254682