*

Latam stocks up 1.8%, FX up 0.7%

*

Mexico July seasonally-adjusted jobless rate at 2.6%

*

Brazil targets billion-dollar organized crime schemes in

fuel

sector

(Updates with afternoon trading levels)

By Pranav Kashyap and Sukriti Gupta

Aug 28 (Reuters) - Brazilian stocks led gains in Latin

America on Thursday, boosting a gauge tracking the region's

equities to an over one-year high, while currencies edged higher

as investors ramped up bets for a Federal Reserve rate cut next

month.

Stocks in Brazil's benchmark Bovespa index hit a

record high, last up 1.6%.

Shares of fuel distributors jumped after Brazilian

authorities targeted billion-dollar organized crime schemes in

the sector.

The real, hit its highest in two weeks and was last

up 0.2%, as investors parsed through data that showed the

General Market Price Index rose 0.36% in August, above

expectations of a 0.21% rise.

Brazil's central government reported a primary budget

deficit of 59.12 billion reais ($10.9 billion) in July, Treasury

data showed, more than six times the deficit from the

year-earlier period but close to analysts' estimates.

Mexican stocks hit an over three-month high, last up

1.1%, while the peso inched 0.1% higher. The country's

seasonally-adjusted jobless rate stood at 2.6% in July, official

data showed.

Bank of America analysts warned of weak growth, remittances

and a deeper-than-expected easing by Banxico potentially

weighing on the peso.

Mexican Economy Minister Marcelo Ebrard

said

that his country is not pursuing a free trade agreement

with Brazil but is instead exploring complementary agreements.

On a larger front, the MSCI gauge for Latin American stocks

jumped 1.8%, reaching its highest level since

May 2024, while a similar gauge for currencies

rose 0.7%.

Traders doubled down on Fed rate-cut bets for next month

after New York Fed President John Williams signaled that a cut

was possible. The dollar edged lower, boosting most

emerging market currencies globally.

A potential Fed rate cut in September could revive the

dollar's role as a funding currency for carry trades in

countries with historically high interest rates, such as Brazil.

"Even if the Brazilian central bank starts easing policy

later this year, carry will still remain attractive. Even more

so if the Fed decides to cut in September," analysts at BofA

global research said.

There has been an increase in carry positions in Brazil for

some time now and recent data has shown some signs of moderation

in inflation, Alejandro Cuadrado, global head of FX and Latam

strategy at BBVA, said, adding, this moderation "with such high

nominal rates" provides a very strong nominal and real return.

Argentine stocks attempted to recover this

week's losses, climbing 1.9% and set for their best day in over

three weeks, while the peso advanced 1.3%.

Argentine President Javier Milei was rushed away by security

on Wednesday after protesters hurled rocks and debris at his

convoy during a public appearance in Buenos Aires province,

Reuters witnesses said.

The Chilean peso rose 0.1%, while stocks in Santiago

edged up 0.2%.

Peruvian equities gained 0.7%. The Ministry of

Economy expects that Peru's economy would grow by an average of

3.2% between 2026 and 2029.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1262.74 -0.5

MSCI LatAm 2412.37 1.83

Brazil Bovespa 141375.49 1.56

Mexico IPC 59289.02 1.09

Chile IPSA 8899.11 0.16

Argentina Merval 2017941.1

1.9

Colombia COLCAP 1838.2 -0.31

Brazil real 5.4049 0.23

Mexico peso 18.631 0.14

Chile peso 967.38 0.06

Colombia peso 4019.5 0.27

Peru sol 3.5388 0.29

Argentina peso (interbank) 1332.5 1.3

Argentina peso (parallel) 1330 -2.63