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Argentina passes economic reform bill

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Colombia's central bank cuts interest rate by 50 basis

points

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Brazil's BTG Pactual buys US-based M.Y. Safra Bank

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Latam stocks down 0.6%, FX off 0.5%

(Updated at 3:35 p.m. ET/1935 GMT)

By Johann M Cherian and Shristi Achar A

June 28 (Reuters) - Brazil's real led declines among

Latin American currencies on Friday and was set for its biggest

quarterly drop since January 2020 as investors weighed fiscal

and political uncertainty in the region's biggest economy.

The currency depreciated 1.4% and was on track for

its biggest monthly drop in nearly two years.

Latest data showed government debt as a share of gross

domestic product rose to 76.8% in May from 76.3% the month

before, while President Luiz Inacio Lula da Silva launched fresh

barbs on the central bank's monetary policy.

"There is a lot of noise in terms of politics, and the

unwillingness of the government to cut some expenses in order to

bring fiscal expenditure down in the coming years is making

investors uneasy," said Andres Abadia, chief Latam economist at

Pantheon Macroeconomics.

MSCI's index tracking Latam currencies

slipped 0.5% against the dollar and was on track for a loss of

over 5% on a monthly basis and over 6% for the quarter.

Political uncertainty following elections in Mexico, a

hawkish tilt in Brazilian monetary policy and the U.S. Federal

Reserve's delay to kick off interest rate cuts have weighed on

sentiment.

Colombia's peso pared gains but was up 0.6% as its

central bank cut the benchmark interest rate by 50 basis points

to 11.25%, its fifth cut since December, as policymakers looked

to boost the economy while keeping a tight grip on inflation.

"Other (emerging markets) as well as G-10 central

bankers have exercised lowering rates, so with high borrowing

costs still in existence in LATAM, 50 bps isn't outrageous,"

said Juan Perez, director of trading at Monex USA.

Mexico's peso bounced 0.6%, breaking a three-day

losing streak.

Copper producer Chile's peso strengthened 1.4% as

prices of the red metal ticked higher. Data showed unemployment

in the country at 8.3% in the quarter through May, lower than

expectations of 8.5%.

Yield on Argentina's dollar bond due in 2029

slipped, snapping three sessions of advances. The country's

lower house approved economic reform measures proposed by

President Javier Milei, giving him his first big legislative win

just over six months after taking office.

Separately, data showed Argentina's economic activity

decreased 1.7% in April from a year ago, its sixth year-on-year

drop in a row.

MSCI's index tracking Latam equities slipped

0.6%, and was on track for a monthly loss of 7% and a drop of

14% for the second quarter.

Brazil's Bovespa slipped 0.5%, with BTG Pactual

dropping 4.7% after the investment lender signed

definitive documents to buy U.S.-based lender M.Y. Safra Bank.

Key Latin American stock indexes and currencies:

Latest Daily %

change

MSCI Emerging Markets 1085.04 0.29

MSCI LatAm 2168.66 -0.6

Brazil Bovespa 123706.40 -0.48

Mexico IPC 52766.20 0.87

Chile IPSA 6431.52 -1.12

Argentina MerVal 1616115.87 -1.195

Colombia COLCAP 1381.38 0.34

Currencies Latest Daily %

change

Brazil real 5.5891 -1.46

Mexico peso 18.3110 0.59

Chile peso 940.3 1.36

Colombia peso 4146.75 0.60

Peru sol 3.829 -0.24

Argentina peso (interbank) 911.0000 0.05