(Updates with afternoon trading levels)

* MSCI LatAm FX at record high, stocks gain 1.5%

* Fitch upgrades Argentina's rating to "B-"

* Brazil's Lula to talk tariffs, organized crime with Trump

* Venezuelan bonds surge after US authorizes restructuring help

By Purvi Agarwal and Avinash P

May 6 (Reuters) - Most Latin American currencies and stocks advanced on Wednesday, as optimism around a potential deal to end the Iran war boosted risk sentiment around the world and pushed oil prices to two-week lows.

Iran said it was reviewing a new U.S. proposal following reports that Washington and Tehran were closing in on a one-page memorandum to end the conflict.

Elevated oil and gas prices due to disrupted shipping through the Strait of Hormuz have raised worries over energy-driven inflation and slowing global economic growth. The dip in energy prices on Wednesday could allay these fears, analysts said.

"Risk is like a spring-loaded coil right now and any type of positive catalyst on the Hormuz or the war situation will unleash it," said Jason DeVito, senior portfolio manager for Federated Hermes' EM funds.

"The longer oil prices remain high and weigh on global growth, any EM country can be negatively impacted. Even oil exporters who see current account benefits, see inflation creep from high energy prices."

Assets in Latin America were swept up in the global rally. MSCI's indexes tracking regional currencies were at a record high, up 0.44%, while the stocks benchmark jumped 1.51%.

Chile's peso appreciated 1.66% against the dollar and was set for its biggest one-day jump in about a month. Chilean stocks advanced 1.92%, with LATAM Airlines surging, tracking the drop in crude prices.

Argentina's peso gained 0.40% and its benchmark index surged 4.7%, after ratings agency Fitch upgraded the country's long-term foreign currency and local currency issuer default rating to "B-" from "CCC+", with a stable outlook.

"If Milei maintains his popularity and inflation remains tame, you can see broad-based growth across economic sectors. Argentina has had some real strong prints on dollar inflows from their export sectors booming and you've had progress on the fiscal side," said DeVito.

"However, the continuation of fiscal and structural reforms is very much dependent on who is in office."

Mexico's peso strengthened 0.79% and local equities climbed 1.75%, both hitting a more than two-week high.

Brazil's real fell 0.22%, while local stocks gained 0.56%, helped by a 3.8% advance by miner Vale.

Brazilian Finance Minister Dario Durigan said President Luiz Inacio Lula da Silva plans to discuss tariffs and cooperation in fighting organized crime at a meeting with Trump in Washington on Thursday.

In Colombia, the country's independent fiscal watchdog will suspend monitoring of public finances and stop issuing legally mandated opinions in November, after the government reduced its operating budget. The local peso fell 0.23%, briefly hitting its weakest in two months.

Venezuelan bonds extended their rally a day after the U.S. Treasury authorized Caracas to hire advisors for what is expected to be one of the biggest sovereign debt restructuring efforts ever undertaken. The 2031 sovereign bond was last up 1.8 cents on the dollar, Tradeweb data showed.

International bonds of frontier and standalone markets were also higher, with bonds of Sri Lanka, Kenya, Egypt and Pakistan all rallying across the board.

Elsewhere, Poland's central bank kept interest rates steady at 3.75% as expected, amid inflation risks and uncertainty linked to the Iran war.

Key Latin American stock indexes and currencies:

Latin American market prices

from Reuters

Equities Latest Daily % change

MSCI Emerging 1702.9 3.31

Markets

MSCI LatAm 3243.7 1.51

Brazil Bovespa 187796. 0.56

11

Mexico IPC 69790.7 1.75

Chile IPSA 10897.9 1.92

2

Argentina Merval 2889236 4.711

.98

Colombia COLCAP 2178.24 0.31

Currencies Latest Daily % change

Brazil real 4.9211 -0.22

Mexico peso 17.234 0.79

Chile peso 890.21 1.66

Colombia peso 3706.09 -0.23

Peru sol 3.463 0.72

Argentina peso 1387.5 0.40

(interbank)

Argentina peso 1380 2.17

(parallel)