(Updated at 1506 GMT)

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Mexico gross fixed investment rises in April

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Brazil's Haddad rules out currency transaction tax

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Kenyan assets in focus as protests intensify

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Latam stocks off 0.5%, FX down 0.3%

By Johann M Cherian

July 2 (Reuters) - Concern around fiscal stability and

interest rates dominated markets across Latin America on

Tuesday, with most equities and currencies trading flat to lower

in the region.

MSCI's index tracking Latin American currencies

slipped 0.5% to an eight month low against the

dollar as markets focused on comments by Federal Reserve Jerome

Powell that cautioned against an imminent reduction of U.S.

interest rates.

As the most influential central bank in the world, the Fed's

policy trajectory often sets the tone for monetary policy for

most central banks across the world.

Brazil's real slipped 0.2% in choppy trading,

hovering at 5.66 to the dollar, levels last seen in early 2022,

as markets assessed comments by Finance Minister Fernando Haddad

that there is no possibility the government would apply a

financial transactions tax (IOF) on currency exchanges.

The real has lost over 14% year to date in value and is the

worst performer among regional economies, as market participants

weigh local fiscal policies and the future of monetary policy as

highlighted by local central bank chief Roberto Campos Neto at a

European Central Bank Forum in Portugal.

"Valuations have been doing well for several months,

especially in the local currency place space and a lot of people

are realizing that fiscal stresses are more real than they

thought, and so you're seeing a little bit of a blowout in the

currencies of Brazil, Mexico and Colombia," said Eduardo Ordonez

Bueso, EM debt portfolio manager at BankInvest.

Separately, data showed consumer prices in Sao Paulo,

Brazil's most populous city, rose 0.26 in June, from an increase

of 0.09 in May. The data is an early indicator of inflation in

the broader economy.

On the flip side, oil exporter Mexico's peso gained

0.8% to hit a one week high as crude prices hit two-month highs.

Copper producer Chile's peso firmed 0.2% and Peru's

sol added 0.7% as prices of the red metal added shine.

Colombia's peso however, traded not far from the flat

mark.

On the equities front, MSCI's index tracking regional

bourses slipped 0.3%, though heavy-weight

Brazilian stocks were up 0.3%.

Mexico's main stock index was flat, with market

participants parsing April gross fixed investment in the country

that increased 1.2% on a monthly basis, up from 0.9% in the

month before.

Colombia's Colcap inched up 0.1%, while bourses in

Chile and Peru slipped 0.4% each.

Elsewhere in emerging markets, yield on Kenya's shilling

was little changed as riots intensified in the east

African country, signaling that President William Ruto had

failed to appease protesters, despite having abandoned plans for

tax rises last week.

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1080.48 -0.63

MSCI LatAm 2168.61 -0.51

Brazil Bovespa 124964.54 0.2

Mexico IPC 52873.35 -0.02

Chile IPSA 6372.84 -0.53

Argentina MerVal 1635554.51 2.56

Colombia COLCAP 1382.68 0.13

Currencies Latest Daily %

change

Brazil real 5.6670 -0.24

Mexico peso 18.2396 0.53

Chile peso 947 -0.05

Colombia peso 4132.96 0.00

Peru sol 3.825 0.01

Argentina peso 914.0000 0.00

(interbank)

Argentina peso 1400 0.36

(parallel)