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Brazil's stock benchmark on track for monthly gain

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Argentine equities set for best month since 1991

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Colombia's central bank holds rates

(Updates with afternoon trading)

By Niket Nishant and Purvi Agarwal

Oct 31 (Reuters) - Latin American stocks and currencies

were set to eke out slim monthly gains on Friday as

post-election optimism in Argentina faded and progress on

U.S.-China trade talks tempered concerns over tariff tensions.

MSCI's index tracking regional stocks was up

0.2%, while an equivalent currencies gauge was

little changed. They were poised to end October with gains of

0.9% and 0.2%, respectively, following three straight weeks of

gains.

While long-term tailwinds, such as investor demand for

diversification, have improved the region's prospects, October's

price swings underscored Latin America's sensitivity to global

economic shifts.

BRAZILIAN STOCKS GAIN, MEXICAN FX COOLS

In Brazil, the Bovespa index climbed 0.5% and was on

track for its third straight monthly gain. Data showed the

country ended the third quarter with an unemployment rate of

5.6%, the lowest in history.

Investors also took heart from a slew of earnings reports,

including from metal and mining company Vale, whose

shares rose 2%.

Still, problems at Brazil's Braskem raised

concerns about the health of the petrochemical industry. J.P.

Morgan, meanwhile, raised its 2025 forecast for defaults on

emerging-market high-yield corporate bonds.

Colombia's peso was little changed after its central

bank held rates at 9.25%, as expected. However, there were three

dissents in the seven-member board. Colombian stocks

declined 0.5%.

Argentine stocks soared 8%, on track for their best

monthly performance since August 1991 and their second-best on

record. The peso, however, weakened 0.5%.

"It's unclear what's going to happen with the peso. But the

government will have the ammunition required to address this

overvaluation without a strong pass-through to inflation," said

Mauricio Monge, senior economist at Oxford Economics.

In contrast, FX analysts at Citigroup said Argentina's real

exchange rate was less overvalued "than generally perceived by

the market" and depreciation in 2026 could be mild.

"With political risk premia now collapsing, we expect

interest rates to fall steeply," they said.

The country is planning to marginally loosen the share of

reserve requirements that commercial banks must report daily,

aiming to revive lending and boost liquidity, Bloomberg News

reported on Thursday, citing a person familiar with the matter.

Mexican equities fell 0.4% after hitting record

highs on Wednesday, while the peso weakened against the

dollar for a fourth straight day, falling 0.2%. October marks

the steepest monthly fall for the currency since December.

Meanwhile, Direct production costs at Chile's large copper

mines fell in the first half of the year, the state-run Chilean

Copper Commission said on Thursday, marking a reversal of the

upward trend of recent years.

Markets in Chile were closed for a public holiday. Chile's

peso looked set for its best monthly performance since

February.

Separately, Morgan Stanley wrote in a note that emerging

market governments have raised $5.1 billion through bond sales

this week, pushing total issuance for the year to $239.8

billion, already surpassing any previous full-year record.

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

MSCI Emerging Markets 1400.73 -0.77

MSCI LatAm 2574.82 0.19

Brazil Bovespa 149445.75 0.45

Mexico IPC 62614.48 -0.44

Chile IPSA 9428.89 1.1

Argentina Merval 3017801.9 8.03

1

Colombia COLCAP 1980.96 -0.49

Brazil real 5.3799 0.01

Mexico peso 18.5625 -0.22

Chile peso 942.12 0.01

Colombia peso 3857.62 -0.13

Peru sol 3.3645 0.49

Argentina peso (interbank) 1444.5 -0.45

Argentina peso (parallel) 1425 0.70

(Reporting by Niket Nishant and Purvi Agarwal in Bengaluru;

Editing by Joe Bavier and Anil D'Silva)