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LatAm FX, stocks set for monthly, quarterly gains

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MSCI global EM stocks gauge eyes longest win streak since 2003

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Colombian central bank holds rates

(Updates with afternoon trading)

By Nikhil Sharma and Purvi Agarwal

Sept 30 (Reuters) -

Latin American stocks and currencies were poised for their third consecutive quarter of

gains on Tuesday, showing resilience despite fears about a potential U.S. government shutdown.

MSCI's index for Latin American currencies was on track for its third

straight quarterly advance, up 5.3%, while it rose 2.8% in September.

On Tuesday, the currency index was little changed as global investors weighed the risks of a

potential U.S. government shutdown, which could delay Friday's jobs data and complicate the

Federal Reserve's rate outlook.

"Should the government shut down on Wednesday, essential operations will continue, and the

Congress will eventually form a short-term deal to reopen the government and continue budget

negotiations," said Anthony Saglimbene, chief market strategist at Ameriprise.

"Markets tend to look through these types of political theater."

The stocks gauge was little changed, on track for a monthly gain of

6.4%. It surged 9.1% for the quarter, marking its longest win streak since April 2023.

Cooling trade tensions, coupled with the U.S. Fed's resumption of its easing cycle have

supported equities this month.

"The Fed cutting without a recession is normally a positive environment for risk... EM has

outperformed on every occasion when the cuts followed a pause after a previous cutting cycle,

such as now," said analysts at Ashmore.

MSCI's global stocks index was set for its ninth month of gains, its longest

winning streak since 2003-2004.

Colombia's central bank held interest rates steady at 9.25%, as expected, amid inflationary

pressures, worsening fiscal outlook and stronger economic data.

Colombian stocks dipped 0.5% on Tuesday, but were set for their fourth straight

monthly advance. The currency steadied while eyeing second-consecutive monthly rise.

The country's fiscal deficit will likely surpass 7% in 2025, a Fitch sovereign ratings

analyst said, as he predicted a slightly slower-than-anticipated pace of economic growth in

2025.

Brazil's real was among the top-performing currencies for the month, up 2%,

benefiting from strong inflows fueled by wider rate differentials with peers, as its central

bank held interest rates steady at a near two-decade high of 15% earlier this month.

Brazilian stocks dipped 0.2%, standing at monthly gains of over 3% month-to-date.

Fresh data showed Brazil's August finances outperformed expectations, with stable debt levels

and the primary deficit below forecasts.

Peru's main index outperformed peers by rising 7.8% month to date - its

best month in nearly two years - despite heightened political uncertainty with Gen Z-led

protests over pension reforms and broader discontent with President Dina Boluarte.

Argentine markets were losing steam after last week's gains after U.S. backing and talks of

a $20 billion central-bank swap line. They rebounded from record lows hit in early September

after President Javier Milei's legislative setback.

The Argentine peso was lower in September, while stocks lost nearly 11%,

extending their decline from August. Investors now eye next month's midterms, where another

setback for Milei could impede his austerity agenda.

Chile's peso rose 0.3%, eyeing a monthly advance. The local central bank will meet

next month and is likely to hold rates. Stocks dipped 0.3% on Tuesday, but were on

track for monthly gains.

Elsewhere, Israeli stocks jumped to a record high, marking a sixth straight monthly

gain, as markets awaited progress on a U.S.-backed Gaza peace plan. The shekel fell 0.6%,

but rose 1% in September.

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

MSCI Emerging Markets 1345.55 0.44

MSCI LatAm 2552.76 0.04

Brazil Bovespa 146068 -0.18

Mexico IPC 63009.85 0.64

Chile IPSA 8970.64 -0.29

Argentina Merval 1769274.7 -1.33

5

Colombia COLCAP 1866.39 -0.45

Brazil real 5.3198 0.03

Mexico peso 18.3201 0.23

Chile peso 961.96 0.26

Colombia peso 3918.46 0.14

Peru sol 3.4699 0.23

Argentina peso (interbank) 1378.5 -1.66

Argentina peso (parallel) 1425 -1.06