(Corrects spelling of ceasefire in headline)

* Latam assets surge on Middle East ceasefire hopes; FX

index at record high

* Caution remains amid ongoing regional tensions and

uncertainty over lasting economic impact

* World Bank slashes economic growth forecasts across

economies

* Brazil and Colombia face domestic policy challenges

ahead of elections and fiscal reforms

By Johann M Cherian

April 8 (Reuters) - Latin American assets surged on

Wednesday, with a currencies index reclaiming a record high as

the region joined a global relief rally after the United States

agreed to a two-week ceasefire with Iran.

MSCI's index tracking equities in the region

jumped 3.6% to hit over a one-month high. A broader EM stocks

index gained 5.4%, putting it on track for its biggest

daily jump since the pandemic over six years ago.

A gauge for currencies in Latam rose 1.5% to

3610.95, hitting a record high as the U.S. dollar weakened

against most currencies in the region. The dollar has rallied

since the Middle East conflict began on safe-haven demand with

the U.S. perceived as relatively resilient to oil price shocks.

Hard-currency bonds across Latin America such as that of

Colombia jumped over 2.3 cents on the dollar,

while those of Chile, Mexico

and Peru climbed over 1 cent each.

Still some worries lingered as Israel continued to strike

Lebanon, drawing threats from Iran, and markets braced for a

potential deal to end the war from a Pakistan-brokered meeting

between Tehran and Washington on Friday.

Eduardo Ordóñez Bueso, an emerging markets debt portfolio

manager at BankInvest struck a more cautious tone.

"To start the year, everything was trading very expensive,

so it made sense to reduce a bit of risk because you'll never

know what can happen. Now it's not the time to make big

commitments to risky bets, because what if a different headline

comes in a week?"

"It will take a few weeks for people to sort of understand

what is going to happen now, what will be the new status quo and

if it's more comfortable to add more risk."

ECONOMIC REPERCUSSIONS IN SPOTLIGHT

The focus will now shift to the lasting impact the conflict

could have on global economic growth.

The World Bank slashed its growth forecasts for most developing

economies across East, South and Central Asia, along with the

Middle East, Europe and Sub-Saharan Africa as the shoot-up in

oil and gas prices makes several goods dearer for households and

businesses, while also fueling uncertainty regarding fiscal

plans for governments.

Data showed consumer prices in Chile, a net crude importer, rose

1% in March from the previous month aided by a surge in oil

prices that increased transport costs.

Expectations that consumer prices would rise over the next 12

months also had traders price in no change to benchmark interest

rates by the central bank later this month.

The Chilean peso and stocks led gains among

peers in the region - up 1.9% and 2.9%, respectively - as crude

prices rolled 13% to below $95 a barrel.

The slide in energy prices also weighed on producers in the

region, with Brazil's Petrobras falling 4.5%,

Colombia's Ecopetrol losing 4.1% and Argentina's YPF

shedding 1.8%.

The economic impact of the war on resources-rich Latin

America is likely to be less severe with many countries in the

region expected to have benefited from a surge in energy prices

last month as net energy exporters.

Mexico's peso firmed 1.5%, while Colombia's peso

appreciated 1.1%.

The focus in Colombia was on an economic emergency decree and a

new tax reform bill that President Gustavo Petro is expected to

submit to Congress to balance the 2026 budget.

However, analysts say it is unlikely that the current

Congress, whose term ends in June, will approve Petro's economic

proposals, which could be a setback for the president seeking a

re-election later this year.

Meanwhile, the head of a lobby group IBP said Brazil's export

tax on crude oil created by the government about a month ago is

a hurdle for new investments by oil majors.

Brazil's real firmed 0.9% on Wednesday, while local

stocks added 2.2%.

Key Latin American stock indexes and currencies at 19:44 GMT:

Stock indexes

Daily

Latest % change

MSCI Emerging Markets 1538.0 5.38

7

MSCI LatAm 3236.2 3.64

6

Brazil Bovespa 192332 2.16

.26

Mexico IPC 70247. 2.51

27

Chile IPSA 10825. 2.93

9

Argentina MerVal 300529 1.1

1.33

Colombia COLCAP 2295.0 0.82

6

Currencies Latest Daily %

change

Brazil real 5.1059 0.92

Mexico peso 17.44 1.5

Chile peso 898.2 1.9

Colombia peso 3634.1 1.07

2

Peru sol 3.3834 1.27

Argentina peso 1,386. 0.50

(interbank) 5

Argentina peso 1,380. 1.08

(parallel) 0

(

Reporting by Johann M Cherian and Twesha Dikshit in Bengaluru;

Editing by Aurora Ellis and Alistair Bell)