*

Mexico c.bank head: Rate cut doesn't signal inflation

victory

*

Zambia strikes preliminary deal on $3 bln international

bond

rework

*

Argentine bonds rise ahead of Easter break

*

Latam FX up 0.3%, Stocks flat

(Updated at 3:40pm ET/1940 GMT)

By Ankika Biswas

March 25 (Reuters) -

Most Latin American currencies gained on Monday as the

weaker dollar and higher commodity prices boosted the value of

the region's resources ahead of this week's crucial U.S.

inflation data.

The MSCI index tracking Latam currencies

rose 0.3%, with the U.S. dollar index down 0.2% on the

threat of currency intervention from Japanese authorities and a

government-driven rally in China's yuan.

The Latam currencies index was on track for a second

straight monthly increase in March, when central banks of major

developed countries signaled leanings toward policy easing,

which would narrow the borrowing rate gap between those

countries and emerging markets.

"Real interest rates in both countries (Brazil and Mexico)

are still among the highest in EM (emerging markets), which

should support currencies and local debt markets," wrote Jon

Harrison, managing director of EM macro strategy at TS Lombard.

Higher rates will "remain a drag on equities in coming

months," he added.

MSCI's gauge of Latam stocks was little

changed on the day, with most local bourses flat to lower.

Investors also awaited the U.S. Federal Reserve's preferred

inflation gauge - the core personal consumption expenditure

price index - due on Friday, after Chair Jerome Powell last week

reassured markets of three rate cuts in 2024.

Major iron ore supplier Brazil's real strengthened

0.46% against the greenback, as the mineral's price rose on

hopes of further demand recovery in top consumer China.

Oil prices jumped around 1%, with Brent crude

topping $86-a-barrel on heightened supply concerns, aiding a

0.4% rise in major producer Mexico's peso.

A media report cited Mexico's central bank head saying its

latest interest rate cut did not signal an end to the battle

against inflation following last week's 25-basis-point cut.

Bucking the trend, Peru's sol dipped 0.2% on weak

copper prices. Peru is one of the top producers of the metal.

Argentina's benchmark stock index slipped nearly 1%

after last week's strong performance. The country's markets

remain in celebration mode with sovereign bonds and equities on

a prolonged rally buoyed by fiscal tightening and pro-investor

measures taken by libertarian President Javier Milei.

Zambian sovereign bonds rose after the

country said it had reached agreement with a group of private

creditors on restructuring $3 billion of its international

bonds.

The Colombian stock market was closed for a public holiday.

Key Latin American stock indexes and currencies at 1940 GMT:

Latest Daily %

change

MSCI Emerging Markets 1036.70 -0.25

MSCI LatAm 2509.38 -0.04

Brazil Bovespa 126905.54 -0.1

Mexico IPC 56580.89 -0.05

Chile IPSA 6494.29 -0.34

Argentina MerVal 1215425.62 -0.976

Currencies Latest Daily %

change

Brazil real 4.9748 0.46

Mexico peso 16.6850 0.43

Chile peso 980.6 0.00

Colombia peso 3894.41 -0.05

Peru sol 3.6949 -0.22

Argentina peso 856.0000 -0.12

(interbank)

Argentina peso 1000 2.00

(parallel)