* Moody's lifts South Africa outlook to positive

* Poll shows support surge for Colombian right-wing

candidate

* Mexico to start USMCA negotiations with the US

* Chilean stocks set for biggest intraday jump since

April 8

(Updates with afternoon trading)

By Purvi Agarwal

May 25 (Reuters) - Most Latin American currencies

appreciated against the dollar on Monday, while stocks were

broadly higher as investors welcomed signs of progress on a

U.S.-Iran peace deal, which weakened oil prices.

MSCI's index tracking Latin American currencies

gained 0.3%, while the stocks equivalent

was up 0.7%.

Trading volumes are expected to be thin as markets in the

U.S. were closed for the Memorial Day holiday.

U.S. Secretary of State Marco Rubio told reporters that the

U.S. would give diplomacy every chance to succeed before

considering whether to deal with Iran in "another way," while

President Donald Trump said talks were going nicely.

Oil prices plunged almost 6% to below $100 a barrel.

Elevated prices have brought inflation worries to the forefront

and prompted investors to rethink prospects for interest rate

cuts and global economic growth.

"For now, markets appear willing to reward incremental

diplomatic progress, though the broader macro outlook remains

highly sensitive to any indication talks begin to stall or

geopolitical tensions re-escalate," said analysts at LMAX

Group.

South African assets soared on Monday with the rand

appreciating 1.1% against the U.S. dollar, at its highest level

in over two weeks.

Equities in the gold-exporting nation surged 2.7%,

partly aided by a 1% jump in gold prices.

Credit rating agency Moody's on Friday revised its outlook on

South Africa to positive from stable, citing strengthening

fiscal performance and progress on structural reforms.

Colombia's peso appreciated 1.3% to its highest level

since April 30.

The latest poll indicated right-wing candidate Abelardo De

La Espriella received a surge in voter support in the final week

leading up to the first round of the presidential election,

nearly tying with leftist Ivan Cepeda.

Prior polls showed more support for Cepeda, who was expected

to continue current President Gustavo Petro's policies.

Chile's peso gained 0.7%. Stocks in the world's

biggest copper exporter rose 2.4% and were set for

their biggest one-day jump since April 8, tracking prices of the

red metal that rose close to 1%.

Currencies in Mexico and Brazil appreciated

0.2% and 0.4%, respectively. Equities in Brazil gained

0.9%, while ones in Mexico reversed course to fall 0.2%.

Mexico is expected to start negotiations with the U.S. on

the USMCA - a North American free trade agreement, which

analysts expect will be the next catalyst for Mexican markets.

In Bolivia, President Rodrigo Paz said he will cut his salary by

50%, in another move to pacify widespread protests against

austerity measures and the cost of living.

The president announced a reshuffle of his cabinet last

week, amid the closure of bank branches and suspension of fuel

supplies to areas affected by blockades and closures.

Markets in Argentina were closed for a public holiday.

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

MSCI Emerging Markets 1712.59 1.57

MSCI LatAm 3061.49 0.66

Brazil Bovespa 177713.64 0.85

Mexico IPC 68169.44 -0.24

Chile IPSA 10821.51 2.44

Argentina Merval -

-

Colombia COLCAP 2126.69 2.08

Brazil real 5.0178 0.38

Mexico peso 17.2745 0.15

Chile peso 894.5 0.69

Colombia peso 3635.43 1.3

Peru sol 3.4143 0.16

Argentina peso (interbank) -

-

Argentina peso (parallel)

- -