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Moody's upgrades Argentina's rating by two notches

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Brazilian shares hit lowest since May

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MSCI LatAm FX, stock indexes on track for weekly losses

(Updates with afternoon trading levels)

By Ragini Mathur, Purvi Agarwal and Shashwat Chauhan

July 18 (Reuters) -

Most Latin American currencies were poised for weekly losses

on Friday as investors focused on global trade negotiations,

while Brazilian assets lagged following news of local political

developments.

MSCI's Latin America currencies gauge

dipped 0.2%, heading for mild weekly losses in its second

consecutive week of declines.

Brazil's real led regional losses, sliding 0.8%

and set for its second straight weekly fall.

Local politics drew attention after Brazil's Supreme

Court issued search warrants and restraining orders against

former President

Jair Bolsonaro

, barring him from contacting foreign officials amid

allegations he had sought interference from U.S. President

Donald Trump.

In a letter last week, Trump said his administration

would impose a 50% tariff on Brazil and expressed support for

Bolsonaro.

"The base case is that Bolsonaro will not be able to run in

the next election, but that will only be confirmed at the

beginning of the second quarter next year," said Alejandro

Cuadrado, global head of FX and LatAm strategy at BBVA.

Brazilian local currency bond returns struggled in July due

to tensions stemming from the Lula-Trump spat.

Mexico's peso appreciated 0.1% on Friday, though the

currency was still on track for a weekly decline.

The country's economy likely expanded 1.3% in June

compared to the same month last year, a preliminary estimate

showed.

Currencies in Colombia and Chile were also

set for weekly losses.

In Argentina, local stocks rose, while the interbank

peso and dollar-denominated bonds faced pressure.

Moody's on Thursday upgraded Argentina's long-term

foreign and local currency issuer rating by two notches, though

it remains within non-investment grade territory.

Most Latin American currencies had briefly jumped

earlier this week after reports suggested Trump planned to fire

the Federal Reserve chair.

However, the dollar recovered losses after Trump

denied the claims.

U.S. economic resilience, highlighted by firm retail sales

data, further boosted the greenback.

MSCI's index tracking Latin American stocks

fell 1.8%, with Brazilian equities

dropping 1.6% to their lowest level since May.

Elsewhere, the Russian rouble weakened 0.8% against

the dollar, over-the-counter market data showed. The European

Union reached an agreement on an 18th sanctions package against

the country in another blow to its oil and energy industry.

HIGHLIGHTS

**

Chile will hold meeting with copper industry next Tuesday to

discuss US tariffs, minister says

** UK, India likely to unveil trade deal next week,

including whisky, EVs, textiles, sources say

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1247.95 0.54

MSCI LatAm 2239.1 -1.77

Brazil Bovespa 133364.27 -1.62

Mexico IPC 56267.76 -0.79

Argentina Merval 2078126.97 0.58

Chile IPSA 8186.06 -0.3

Colombia COLCAP 1733.54 -0.67

Brazil real 5.5855 -0.76

Mexico peso 18.7286 0.14

Chile peso 963.26 -0.07

Colombia peso 4015.5 0.14

Peru sol 3.565 -0.15

Argentina peso 1285 -0.78

(interbank)

Argentina peso (parallel) 1285 0.78