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Latam stocks up 1%, FX up 0.1%

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Mexico posts $296 million trade surplus in July

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Brazil loan defaults hit highest level in about 8 years

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Brazil says might challenge tariffs in US courts

(Updates with afternoon trading levels)

By Pranav Kashyap, Purvi Agarwal and Sukriti Gupta

Aug 27 (Reuters) - Latin American currencies and stocks

were mixed on Wednesday after logging declines in the previous

session, as investors shifted focus from concerns over the U.S.

Federal Reserve to AI chip giant Nvidia ( NVDA ).

MSCI's index for Latin American currencies

was little changed, while a similar index for equities

rose 1%.

The Mexican peso was flat, while its benchmark stock

index advanced 0.8%. Data showed the country posted a

$296 million trade surplus in July.

Recent indicators have, however, painted a picture of a

sluggish economy, underscoring expectations for further rate

cuts. Minutes from Banxico's latest policy meeting last week

revealed board members were open to easing rates further to

bolster growth.

Analysts at Morgan Stanley expect Banxico will deliver a

quarter-point rate cut in September, as it had more room for

further easing with a Fed cut largely priced in for next month.

In Brazil, fresh data showed loan defaults rose to their

highest level in nearly eight years in July, highlighting the

strain from interest rates at 15%, which remain near a 20-year

high.

A separate dataset showed Brazil's economy created fewer

formal jobs than expected in July.

Additionally, Finance Minister Fernando Haddad said the

South American country may challenge the steep tariffs imposed

by the U.S. administration on imports of Brazilian goods in U.S.

courts.

Brazil's real was up 0.2%, while the country's

equities gained 1%.

"There's not going to be a lot of economic impact from the

tariffs that's going to push Brazil's economy into recession ...

any kind of impact we'll see is mostly going to be

sentiment-driven," said Brendan McKenna, economist at Wells

Fargo.

"From an economic perspective, things are slowing down more

from restrictive monetary policy and limited fiscal support

rather than the tariffs."

Colombia's peso, up 0.3%, was supported by gaining

oil prices, while Chile's peso and Peru's sol were

subdued, in line with the dollar index that was last

flat.

The greenback had dipped on Tuesday amid revived concerns

over the Federal Reserve's independence after U.S. President

Donald Trump said he would fire Fed Governor Lisa Cook over

mortgages, prompting Cook to announce plans to file a lawsuit.

On the stocks front, equities were mixed as investors parsed

through Nvidia's ( NVDA ) earnings, which will set the tone for global

markets in the coming days.

Stocks in Santiago rose 0.7%, while those in

Bogota edged 0.1% lower.

Argentina's peso rose 0.6% on Wednesday,

recovering some ground after falling more than 2% earlier this

week, as corruption allegations rattled the country's political

landscape and financial markets.

However, stocks in Buenos Aires dropped 2.9%.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1270.55 -0.29

MSCI LatAm 2378.86 1.01

Brazil Bovespa 139240.21 1.07

Mexico IPC 58584.11 0.78

Chile IPSA 8885.72 0.67

Argentina Merval 1974352.16 -2.90

Colombia COLCAP 1852.88 -0.14

Brazil real 5.4183 0.23

Mexico peso 18.6605 -0.05

Chile peso 967.69 -0.15

Colombia peso 4028.82 0.33

Peru sol 3.5497 -0.04

Argentina peso (interbank) 1349 0.6

Argentina peso (parallel) 1335 -2.99