*

Latam stocks down 0.3%, FX off 0.2%

*

US July PCE inflation at 2.6%, meets forecasts

*

Mexico central bank mulls rate cuts

*

Brazil public debt rises in July on higher interest

payments

(Updates with afternoon trading levels)

By Pranav Kashyap and Sukriti Gupta

Aug 29 (Reuters) -

Latin American currencies and stocks were set to log gains

for their fourth consecutive week but were mixed on Friday

following a broadly in-line reading of U.S. inflation data.

The MSCI gauge for Latin American stocks

edged down 0.3% but was on track for its best monthly

performance in eight months, while a similar gauge for

currencies was set to recover lost ground.

Latin American assets have gained largely on dollar weakness

this month, stemming from rising bets on a U.S. rate cut in

September and concerns over the independence of the Federal

Reserve.

Brazilian equities rose 0.4%, closing at a record

high and marking their best month in over a year, as August

inflation data indicated signs of cooling.

Brazilian President Luiz Inacio Lula da Silva said he was in

"no rush" to reciprocate tariffs imposed by the United States,

reiterating his openness to negotiate.

"Tariffs on an economic level create a dent for Brazil ...

the economic leadership is saying we cannot afford getting

completely away from the U.S., so a turnaround makes sense,"

said Juan Perez, head of trading at Monex USA.

"If it's accompanied by decent data (recent inflation

data) suggesting things are going to be more stable, that's

going to help the real."

Separately, data showed Brazil's public sector gross debt

reached 77.6% of gross domestic product in July.

Most currencies in the region were broadly lower as

investors digested fresh U.S. data showing consumer spending

increased solidly in July while underlying inflation picked up,

driven by tariffs on imports that raised prices of some goods.

The Argentine peso fell 0.7% but was on track to

log its first monthly gain in years, while stocks in Buenos

Aires slipped 0.6%, poised for their worst month since

February 2024.

Despite data supporting President Javier Milei's fiscal

overhaul efforts, recent political tensions ahead of the October

legislative election campaign are clouding the outlook for the

country's assets.

JPMorgan analysts, however, expressed a favorable view

on Argentina, saying the country "continues to deliver on key

issues that were set at the beginning of the Milei

administration".

They also noted that a regime change in Chile was a real

possibility in the upcoming elections.

Chilean stocks edged down 0.1% but were on

track to log their best monthly performance in over two years,

while the currency was little changed despite data

showing Chile's

unemployment

rate fell to 8.7% in July.

Mexico's peso held steady, while stocks

fell 0.7%, set to snap a three-week winning streak.

The central bank released its quarterly report, forecasting

low economic growth for 2025 and moderate expansion through

2026, while hinting at the possibility of additional interest

rate cuts.

Colombia's peso rose 0.2%, poised for its best

month since January, while stocks gained 0.5%, aiming

for a third consecutive month of gains.

Elsewhere, Thai stocks fell as much as 1.5%, and

the baht dropped 0.3% after the country's

Constitutional Court dismissed Prime Minister Paetongtarn

Shinawatra over an ethics violation.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1259.1 -0.17

MSCI LatAm 2401.43 -0.27

Brazil Bovespa 141589.02 0.38

Mexico IPC 58754.15 -0.67

Chile IPSA 8908.78 -0.14

Argentina Merval 1984596.06 -0.64

Colombia COLCAP 1846.35 0.44

Brazil real 5.4214 -0.16

Mexico peso 18.6624 -0.08

Chile peso 966.26 0.02

Colombia peso 4007.5 0.19

Peru sol 3.53 0.26

Argentina peso (interbank) 1342 -0.7

Argentina peso (parallel) 1325 -2.26