*

Brazil's Lula's approval rating rises after Trump's

tariffs

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Trump signs deal with Indonesia, agreeing to lower tariffs

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Chile's markets closed for public holiday

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MSCI Latam FX flat, stocks edge up 0.2%

(Updates with afternoon trading levels)

By Ragini Mathur, Purvi Agarwal and Shashwat Chauhan

July 16 (Reuters) -

Latin American currencies mostly gained on Wednesday as the

dollar weakened following reports suggesting U.S. President

Donald Trump

might

fire Federal Reserve Chair Jerome Powell, although the

greenback recovered slightly after Trump denied the claims.

A Bloomberg report earlier in the day indicated Trump

was likely to oust Powell soon, but the president later

clarified that he was not planning to fire the Fed Chair, while

stopping short of completely ruling out the possibility.

The dollar index slipped 0.3% on the day,

boosting most Latin American currency pairs.

"Dollar plunging is what you would expect ... markets should

be concerned about potential interference in the Fed's

independence," said Steve Sosnick, chief analyst at Interactive

Brokers.

Mexico's peso led regional gains, rising 0.5%,

supported by plans for stronger trade collaboration with Canada

amid Trump's tariffs.

Peru's sol climbed 0.3% in light trading, while

Colombia's peso strengthened 0.4%.

Brazil's real remained volatile, edging down

0.1%.

The country on Wednesday urged the U.S. to respond to a

trade proposal

submitted in May, reaffirming its openness to a "mutually

acceptable" deal after Trump announced a 50% tariff on Brazilian

goods starting in August.

Last week, Trump had threatened Brazil with tariffs, a

move that boosted Brazilian President Luiz Inacio Lula da

Silva's

approval rating

for the first time in a year, recent polls showed.

"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 the country's gross

debt would rise to 79% of its gross domestic product (GDP) by

the end of the year.

MSCI's index for Latin American currencies

was flat, while the regional stocks benchmark

rose 0.2%.

Brazilian shares reversed earlier losses to gain

0.2%, bolstered by materials and consumer staples stocks.

In trade developments, Trump agreed with Indonesia on a

19% U.S. tariff on imports from the Southeast Asian nation, down

from the previously threatened 32%.

Indonesian equities climbed to their highest level

in over a month, while the rupiah weakened.

The deal improved market sentiment, as investors hoped for

less severe tariffs and further trade agreements.

Chile's markets were closed for a public holiday.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1240.19 -0.02

MSCI LatAm 2271.56 0.21

Brazil Bovespa 135531.57 0.21

Mexico IPC 56549.42 0.12

Argentina Merval 2028639.79 -2.24

Chile IPSA -

-

Colombia COLCAP 1701.62 0.13

Brazil real 5.5613 -0.08

Mexico peso 18.7226 0.52

Chile peso -

-

Colombia peso 4014.18 0.36

Peru sol 3.548 0.34

Argentina peso 1260 0.08

(interbank)

Argentina peso (parallel) 1285 3.50