*

US, Brazilian markets shut for holiday

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Colombian court suspends President Petro's labor reform

referendum decree

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Israel-Iran conflict enters seventh day, sapping risk

appetite

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Latin American currencies down 0.1%, stocks shed 0.5%

(Updates with mid-session prices)

By Medha Singh and Pranav Kashyap

June 19 (Reuters) - Latin American currencies slipped

for a second straight day on Thursday, as traders, thinned out

by holidays in the U.S. and Brazil, kept a close eye on

escalating Iran-Israel tensions that eclipsed a busy slate of

central bank meetings.

Israel bombed nuclear targets in Iran, Iranian missiles hit an

Israeli hospital overnight and U.S. President Donald Trump kept

the world guessing about whether Israel's superpower ally would

join it in airstrikes.

Israel's shekel dipped 0.3% while Tel Aviv's

blue-chip index hit a fresh record high.

MSCI's index for Latin American currencies

fell 0.1%, but remained not far from an all-time high hit on

Tuesday. Markets in Brazil, the region's biggest economy, were

shut for a holiday.

"Markets have been pretty muted so far. The view is that they're

pricing in a smaller likelihood of a complete ban on oil or

disruption," said Lilian Chovin, head of asset allocation at

Coutts.

"Even if the U.S. were to get involved, the markets'

perception is that the conflict will remain localized."

Latin American currencies have emerged as top performers

among emerging markets this year, driven by attractive

valuations, a weakening global dollar, and limited fallout from

Trump-era tariff policies.

Mexico's peso dipped 0.3% as a preliminary estimate from

the national statistics agency showed the country's economy

likely contracted 0.3% in May from the same month a year

earlier.

Investors also were keeping a close watch on Hurricane Erick as

it lost strength, being downgraded from a powerful Category 4

storm to a Category 1. Despite the weakening winds, Erick

battered businesses, wrecked boats, and flooded streets in

southern Mexico.

The storm's impact also could have financial repercussions.

Icosa, which manages insurance-linked securities, noted on

LinkedIn that Erick might trigger a partial payout from Mexico's

parametric catastrophe bond. Issued by the World Bank in 2024,

the $175 million bond was designed to help the country manage

the risks of Pacific hurricanes.

Colombia's peso eased 0.4% to hit nearly a two-month

low.

A Colombian high court on Wednesday suspended a decree by

President Gustavo Petro that sought to call a controversial

referendum on his proposed labor reform, the latest setback for

the leftist leader's effort to broadly expand worker benefits.

Elsewhere, the Turkish lira eased 0.2% after the

country's central bank held its key interest rate steady at 46%,

as expected, and also kept the upper band of its rate corridor

at 49% despite predictions it would be lowered.

A day earlier, Brazil's central bank decided unanimously to lift

its benchmark Selic rate to 15%, marking its seventh consecutive

hike amid unanchored inflation expectations and resilient

economic activity.

The real hit 5.465 per dollar on Tuesday, its highest

level in eight months.

The Argentine peso tumbled 1.9%, outpacing declines

across the region, after fresh data revealed the nation's

unemployment rate unexpectedly edged up to 7.9% in the first

quarter, which was higher than the 7.7% seen a year ago.

The Chilean peso shed 0.4%.

MSCI on Tuesday will announce its decision on whether the

country will move to its "Emerging Market" index from current

"Frontier Market," a decision that could spur capital flows into

the region.

The Peruvian sol rose 0.1%.

Stock markets in the region were mixed, with the benchmark index

in Mexico down 1%. Chile's key stock market index

slipped 0.5% while Argentina edged higher.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1178 -1.29

MSCI LatAm 2281.07 -0.46

Brazil Bovespa 138716.64 -0.09

Mexico IPC 56142.02 -1.04

Argentina Merval 2063953.4 0.632

6

Chile IPSA 8043.73 -0.54

Colombia COLCAP 1652.09 0.08

Currencies Latest Daily %

change

Brazil real 5.491 0

Mexico peso 19.047 -0.27

Chile peso 939.65 0.23

Colombia peso 4085.5 -0.44

Peru sol 3.589 0.14

Argentina peso (interbank) 1165 -1.93

Argentina peso (parallel) 1180 0.85