*

Venezuelan bonds rise on political upheaval, investor

optimism

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Regional stocks gain, Peru benefits from metal price rally

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Ethiopia's bond gains after restructuring agreement

announcement

(Recasts with afternoon prices)

By Ragini Mathur, Twesha Dikshit and Pranav Kashyap

Jan 5 (Reuters) -

Latin American equities rallied on Monday, taking in stride

the surge in geopolitical risk after the U.S. capture of

Venezuelan President Nicolas ‌Maduro, an episode that still drove

a dash for safe-haven assets and Venezuelan bonds.

U.S. President Donald Trump said on Sunday, a ​day after

Maduro's capture, that a second strike could follow if remaining

members of the administration ‍do not cooperate with his efforts

to "fix" the country.

Venezuela's international government bonds ⁠advanced as much

as 7.5 ⁠cents to almost 9 cents on the dollar, TradeWeb data

showed, reflecting investor optimism.

"We continue to like the Venezuela bonds. ‌We have been

advocating going long Venezuela bonds since ​Feb 2024. Bonds

already reflect optimism, but still have room to grind higher as

swift Maduro removal and U.S. support surprised on the upside,

in our view," Citi ⁠analysts said in a note.

Chilean and Peruvian ‍shares hit

record ​highs, rising over 2.5% each, with the latter benefiting

from rallying metal prices. Mexico's benchmark added

1.68% and Colombia's climbed 2.6%.

Analysts and investors said the relatively calm market

reaction to Maduro's ‍capture was because Venezuela's oil

production relative to global output is small and it would take

years of investment for production to catch up.

"Any impact on the global oil market is likely to be

very incremental and dependent on sanctions," said Dr Mike

Haigh, head of FIC & commodity research at Societe Generale.

"Whether we see production increases or further losses

is not going to be ​impactful in ‍the short to medium term."

VENEZUELAN SOVEREIGN BONDS WERE LAST YEAR'S BEST PERFORMERS

The country's sovereign bonds, which went into default in

2017, were last year's leading performers globally, ​nearly

doubling in price as Trump intensified military pressure on the

Maduro regime.

Both MSCI's regional equities index jumped

2.2% while the corresponding currency gauge

gained 0.4%.

The Colombian peso jumped 1% while the Mexican

peso was flat, with the latter used as a proxy for LatAm risk.

Analysts said currencies of left-leaning governments

throughout the region could face pressure.

Brazil's real gained 0.38%, while Chile's peso

rose 0.2%.

Beyond Latin America, emerging market investors welcomed

Ethiopia's announcement of a ​preliminary restructuring agreement

with bondholders. The African nation's sole international bond

gained about 2.4 cents to bid at 109.5 cents on the dollar

according to Tradeweb data.

MSCI Emerging Markets 1451.85 1.56

MSCI LatAm 2780.18 2.20

Brazil Bovespa 162125.07 0.99

Mexico IPC 65222.12 1.68

Argentina Merval 3113573.8 -0.407

Chile IPSA 10693.66 2.54

Colombia COLCAP 2123.85 2.65

Brazil real 5.4017 0.38

Mexico peso 17.897 -0.02

Chile peso 902.58 0.24

Colombia peso 3733.28 1.05

Peru sol 3.362 -0.01

Argentina ‍peso (interbank) 1469.5 0.37

Argentina peso (parallel) 1495 2.34