(Updated at 1515 GMT)

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Mexico inflation rises 5.57% in July

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Rate decisions due from Mexico and Peru later in the day

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Eletrobras, Embraer ( ERJ ) shares up after results

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El Salvador bonds continue to gain

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Latam stocks index up 0.7%, FX up 0.1%

By Lisa Pauline Mattackal

Aug 8 (Reuters) - Latin American stocks and currencies

broadly jumped on Thursday as better-than-expected U.S. jobless

claims data brought some optimism back to cautious markets,

while Mexico's peso rose after inflation data strengthened the

case for the Bank of Mexico to leave interest rates unchanged.

Data showing an improvement in U.S. jobless claims figures

lifted hopes that worries about a slowdown in the world's

largest economy were overstated after those concerns sparked a

bout of market volatility that sharply hit riskier emerging

market assets.

Latin American currencies were broadly up, with the dollar

weakening between 0.3% and 0.7% against the Brazilian real

, Colombian peso and Chilean peso.

"The depreciation that a lot of these currencies have

experienced actually represent some pretty attractive entry

points," said Brendan McKenna, FX strategist at Wells Fargo,

though adding emerging market currencies were likely to be

somewhat volatile until the U.S. economic picture becomes more

clear.

Argentina's benchmark stock index leapt 4.7%,

leading broad gains in the region, and MSCI's Latin American

stocks index rose 0.7%. It outperformed the

broader EM stocks gauge, after a selloff in tech

stocks hit Asian bourses earlier in the day.

Mexico' annual headline inflation jumped 5.57% in July to

its highest level in over one year. The data was in line with

forecasts, but will likely further complicate the decision

facing its central bank as it balances limiting inflation with

the need to stimulate growth.

Given rising inflation, most analysts polled by Reuters

earlier in the week expected Banxico to hold interest rates at

the conclusion of its policy meeting later on Thursday.

The Mexican peso jumped to 19.11 versus the dollar,

continuing to recover after volatility in global markets and an

unwinding of Japanese yen-funded carry trades.

"I think the Central Bank of Mexico is going to be on hold

today and for the next couple of months, so the carry trade will

still be somewhat attractive and can act as a mechanism for the

peso to recover," McKenna said.

A rate announcement in Peru is also on deck, with its

central bank also expected to hold rates steady. The Peruvian

sol was little changed.

On the company front, shares of planemaker Embraer ( ERJ )

jumped 7.6% after second-quarter net income jumped

almost 40%, while shares of Brazil's largest power company

Eletrobras rose 3.5% after the company reported a

nearly 8% rise in net profit.

El Salvador's sovereign bonds continued to rally after the

International Monetary Fund said the two sides had made progress

in talks, with the 2034 maturity gaining more than

1.6 cents on the dollar.

In Europe, Hungary's forint strengthened to 396.24

to the euro, snapping three sessions of declines after data

showed inflation rose in July.

HIGHLIGHTS

** In deluge of protests, fuel subsidies prove hard to

abolish

** BOJ's communication about-face may haunt future rate

moves

** China's overseas investment funds relax purchase

restrictions after global sell-off

Key Latin American stock indexes and currencies

MSCI Emerging Markets 1046.54 -0.36

MSCI LatAm 2185.61 0.73

Brazil Bovespa 128448.74 0.73

Mexico IPC 52918.32 0.45

Chile IPSA 6238.02 0.73

Argentina Merval 1519738.8 4.654

6

Colombia COLCAP 1309.29 0.96

Currencies Latest Daily %

change

Brazil real 5.6143 0.35

Mexico peso 19.1204 0.76

Chile peso 936.7 0.65

Colombia peso 4101.75 0.72

Peru sol 3.7217 -0.02

Argentina peso (interbank) 936.5 -0.053390

283

Argentina peso (parallel) 1355 2.2140221

4