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Bank of Mexico lowers benchmark interest rate to 7.25%

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Brazil's central bank keeps rate on hold

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JPMorgan ( JPM ) CEO says Argentina may not need bank loan

(Updates with afternoon trading)

By Nikhil Sharma and Sukriti Gupta

Nov 6 (Reuters) -

Latin American currencies hit intraday highs on Thursday, with the Brazilian real advancing

after a hawkish pause by the central bank, while the Bank of Mexico delivered a quarter-point

rate cut.

Global risk-off sentiment returned and technology stocks came under fresh selling

pressure as worries over stretched valuations lingered after a brief respite on Wednesday,

prompting LatAm assets to pare earlier gains.

"It turned more risk-off through the session...what's more important for the FX is the

level of volatility, yesterday we picked up a little bit of volatility, but it's not necessarily

dramatic. At the same time you have had a decent contraction of U.S. yields, so that reduces the

dollar push in general and helps accommodate some of the risk-off," said Alejandro Cuadrado,

global head of FX and LatAm strategy at BBVA.

An index tracking the regional currencies was up 0.3%, while a broader gauge

for LatAm equities also added 0.3%.

In Brazil, the real rose 0.2% after the central bank kept interest rates steady for a

third straight meeting on Wednesday and signaled more such pauses to bring inflation back to

target. Stocks in Sao Paulo edged up 0.1%.

The decision came in view of growing calls from key government officials to bring down borrowing

costs as the sky-high rates continue to affect growth in Latin America's biggest economy.

The currency, up 13.4% so far this year, is expected to keep attracting carry-trade inflows

given policy rates parked near two-decade highs, while expectations of prolonged dollar weakness

could further burnish the real's appeal, as projected by a Reuters poll.

Data showed Brazil's trade surplus jumped 70.2% in October from the same month last year,

beating economists' estimates.

Separately, the Bank of Mexico lowered its benchmark rate by 25 basis points in a decision

widely anticipated by the market, signaling it could deliver future cuts at coming meetings as

inflation falls in Latin America's second-largest economy.

Mexico's peso was up 0.1%, while the stock index was flat.

"It's a bit more cautious....the main difference, which is maybe seen as less dovish, is a

subtle use of words...I think before they were using 'assess further adjustments' and now they

are using 'to evaluate reducing the reference rate'. So it's a bit more generic and that's seen

as potentially more cautious, Cuadrado added.

Stocks in Argentina fell 2.3%. Markets in the South American nation rallied last

week after President Javier Milei's party cruised to victory in the midterms, bolstering

investor confidence in the libertarian leader's austerity agenda and in U.S. support.

JPMorgan Chase ( JPM ) CEO Jamie Dimon said Argentina may not need a bank loan, praising Milei's

efforts of economic overhaul.

The local peso was steady for the day. In an interview with the Financial Times,

Milei rejected investor calls to allow the peso to float freely and vowed to keep the peso

within gradually widening bands.

As per the Reuters Poll, the currency is forecast to fall 12.7% to 1,660 per dollar in the

next 12-month period ending October 30.

Chile's peso ticked up 0.1% and the main stock index advanced 0.3%, with

all eyes set on a pivotal vote in less than two weeks.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1394.07 0.8

MSCI LatAm 2625.75 0.33

Brazil Bovespa 153465.12 0.11

Mexico IPC 63380.14 0

Chile IPSA 9459.59 0.29

Argentina Merval 2977021.83 -2.33

Colombia COLCAP 2046.34 0.52

Brazil real 5.3477 0.22

Mexico peso 18.558 0.1

Chile peso 941.71 0.11

Colombia peso 3782.5 1.29

Peru sol 3.3738 -0.14

Argentina peso (interbank) 1449.5 flat

Argentina peso (parallel) 1415 -8.48