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Brazil's Lula's approval rating up after Trump's tariffs

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Trump signs deal with Indonesia, settles for lower tariffs

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Chile's markets closed for public holiday

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MSCI Latam FX up 0.1%, stocks shed 0.4%

(Updates with latest prices, quote)

By Ragini Mathur and Purvi Agarwal

July 16 (Reuters) - Most Latin American currencies

gained on Wednesday after media reports said U.S. President

Donald Trump will likely fire Federal Reserve Chair Jerome

Powell soon, sending the dollar tumbling.

Trump denied the reports, which cited anonymous sources.

Trump has criticized the U.S. central banker repeatedly,

urging him to lower interest rates in the world's biggest

economy. This has raised concerns over the Fed's independence.

The dollar index tumbled as much as 0.9%

following the news, but pared declines. It was still lower on

the day, uplifting most currencies in Latin America.

"It's pretty cleanly a dollar negative ... not only in

terms of expectations for lower interest rates, but also

credibility for U.S. asset markets and the loss of independence

of the Fed," said Chris Turner, global head of financial market

research at ING.

Mexico's peso gained the most, up 0.7%. Mexico

also planned stronger trade collaborations with Canada in the

wake of Trump's tariffs.

Peru's sol gained 0.3% in low volumes, while

Colombia's peso strengthened 0.2% despite a 1% fall in

oil prices.

Brazil's real pared earlier declines, and was

last down only 0.2%.

Trump had threatened Brazil with tariffs last week,

which proved to be beneficial for Brazil's President Luiz Inacio

Lula da Silva, whose approval rating rose for the first time in

a year, polls showed.

Lula has been trying to implement fiscal discipline in the

economy, which has proved difficult with his administration's

back and forth with the legislative. The bodies reached a

stalemate regarding Lula's bill on the IOF tax.

"The current administration will use U.S. import tariffs on

Brazil to gain political favor among its electoral base ... so

anything that the U.S. does to antagonize Brazil is likely to

support the current administration," said Thierry Wizman, global

FX and rates strategist at Macquarie.

Separately, Brazil's Treasury projected that the country's

gross debt would climb to 79% of its gross domestic product

(GDP) by the end of the year.

MSCI's index for Latin American currencies

reversed early declines to gain 0.1%, while the regional stocks

benchmark slipped 0.4%.

Brazilian shares fell 0.6%, while Colombia's

were down 0.4%.

On the trade front, Trump agreed with Indonesia on a 19%

U.S. tariff on imports from that country, down from the

previously threatened 32%.

Indonesian equities touched their highest in over a

month, while the rupiah slipped.

The deal also helped broader sentiment, as markets hoped for

more trade deals and that Trump's tariffs would not be as severe

as originally expected.

Chile's markets were closed for a public holiday.

Elsewhere, Egypt said it expected to have a delayed review

of its $8 billion International Monetary Fund programme

completed by September or October.

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

MSCI Emerging Markets 1239.27 -0.1

MSCI LatAm 2258.21 -0.38

Brazil Bovespa 134407.06 -0.62

Mexico IPC 56411.57 -0.13

Chile IPSA

- -

Argentina Merval 2033788.1 -1.99

Colombia COLCAP 1692.14 -0.43

Brazil real 5.5658 -0.17

Mexico peso 18.6917 0.68

Chile peso

- -

Colombia peso 4021.63 0.17

Peru sol 3.5479 0.34

Argentina peso (interbank) 1258 0.24

Argentina peso (parallel) 1290 3.10