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LatAm FX up 0.92%, stocks up 0.69%

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Brazil's industrial activity contracts in May

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Brazil economists see 2025 inflation at 5.46%, poll shows

(Updates with mid-session prices)

By Nikhil Sharma and Pranav Kashyap

June 2 (Reuters) -

Latin American currencies rose on Monday, with Mexico's peso

spearheading the rally as investors leveraged a softening dollar

and robust commodity prices against the shifting landscape of

U.S. President Donald Trump's trade policies.

MSCI's index of Latin American equities rose

0.75%, while a parallel index for currencies was

up 0.2%.

The dollar index dropped 0.6% to hit its lowest level

since April 22 as investors continued to reassess the

greenback's safe-haven appeal.

Mexico's peso chalked up a 1% gain against the

greenback and was near an eight-month high, putting it on track

for its most significant single-day climb in three weeks.

Domestically, Mexico held its first-ever judicial elections

on Sunday, part of a contentious effort to reform the nation's

judiciary - a move critics warn could imperil the rule of law.

Results are anticipated on June 15. Mexican stocks

were flat.

Surging crude prices provided tailwinds for Latin

American currencies after the OPEC+ cartel held firm on July

output increases, largely confounding market expectations.

Oil export revenues form a critical bedrock of national

incomes, particularly for countries such as Mexico and Brazil in

South America.

In Brazil, the real gained 0.7%, while the country's

main stock index slipped 0.21%.

Meanwhile, a

poll

of economists by Brazil's central bank indicated an

anticipated year-end inflation rate of 5.46%, a downward

revision from 5.50% projected last week.

Uncertainty prevailed among investors after Trump's threat

on Friday to hike duties on imported steel and aluminum to 50%,

effective this Wednesday.

Adding to the trade tumult, a Reuters report revealed

the White House's

demand for countries

to present their "best and final" trade negotiation offers

by Wednesday, a move aimed at accelerating discussions with

various partners before the July 9 deadline.

Trump's trade policies have proven inimical to U.S. assets,

which have lately shed their safe-haven allure, compelling

investors to seek refuge in international alternatives.

"Overall level of uncertainty and lack of reliability in the

U.S. continues to feed one narrative, and that is

diversification away from the dollar," said Alejandro Cuadrado,

global head of FX and LatAm Strategy at BBVA.

Meanwhile, copper-producing powerhouses Peru and Chile saw

their assets leap, with Lima stocks soaring to an

all-time high and the Chilean peso advancing 0.64%, both

boosted by rising price of the red metal.

Data showed Chile's economic activity rose 2.5% in April

compared with the same month last year - notching its tenth

consecutive increase on a yearly basis supported by higher

copper output.

Colombian markets were closed for a public holiday, while

stocks in Argentina continued to slide for the fifth

consecutive session.

Elsewhere, Ukrainian sovereign bonds slipped as the second

round of Russia-Ukraine peace talks collapsed precipitously

within the hour.

The 2041 maturity international bond shed approximately

2 cents on the dollar.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1153.62 -0.32

MSCI LatAm 2228.91 0.69

Brazil Bovespa 136732.58 -0.21

Mexico IPC 57843.39 0

Argentina Merval 2213838.6 -2.859

7

Chile IPSA 8038.38 -0.11

Colombia COLCAP 1608.9 -1.69

Brazil real 5.6822 0.7

Mexico peso 19.2072 1.05

Chile peso 938.75 0.64

Colombia peso 4150.3 0.05

Peru sol 3.62 -0.08

Argentina peso (interbank) 1180 0.85

Argentina peso (parallel) 1145 3.06