* Brazil inflation exceeds target for the first time

since October

* Argentina's opposition seeks alliance as Milei's

popularity hit

* Colombian stocks lose ground after rallying on Tuesday

By Avinash P and Purvi Agarwal

May 27 (Reuters) - Latin American assets were mixed on

Wednesday, as investors cautiously assessed reports saying a

draft deal between the U.S. and Iran would reopen the Strait of

Hormuz, which sent oil prices lower.

Iran's state TV said it had obtained a draft of an initial,

unofficial framework for a memorandum of understanding with the

U.S., under which Iran would restore commercial shipping through

the waterway to pre-war levels within a month.

Oil prices dropped over 5% following the news, but markets

remained wary of the headlines. Assets have whipsawed during the

duration of the conflict, rising on de-escalation signs and

selling off on the slightest hint of renewed fighting.

LatAm assets were mixed on the day. Colombia's peso

appreciated 0.9% against the dollar. Its main share index

gave back 1.7% after its biggest intraday jump in four

years on Tuesday.

The country heads to the first round of polls this weekend,

with the latest opinion poll putting leftist Ivan Cepeda and

right-wing Abelardo De La Espriella in a close tie.

"Colombia used to be a thriving, deep market with quite a

bit of liquidity historically, however, over the past few years,

it has seen a pretty dramatic drop off in relative liquidity,"

said Thea Jamison, managing director at CHANGE Global.

"If we do see more pro-business, pro-growth policies, that

would bode very, very well for the market."

In Brazil, another country bound for polls this year, the

real slumped 0.5% to a near two-week low. Local stocks

were flat. State-run oil giant Petrobras fell

2%.

Separately, data showed the country's 12-month inflation in

early May exceeded the upper end of the central bank's target

range for the first time since October 2025, casting doubts on

further monetary policy easing after the central bank delivered

two back-to-back cuts this year.

Currencies in Mexico and Chile depreciated

0.4% and 0.2% respectively. Chilean equities surged

1.3%.

Mexico is in the midst of negotiations with the U.S. on the

reworking of the USMCA - an existing North American free trade

agreement - ahead of which U.S. Trade Representative Jamieson

Greer said the country planned tariffs on its partners.

The USMCA shielded a part of the nation's exports from some

of the tariffs President Donald Trump had imposed in 2025.

Meanwhile, Argentina's Merval index jumped 2.5% to

an over one-month high. Its peso was flat.

Political developments were in the spotlight again after

leaders within Peronism, the nation's main opposition movement,

looked to capitalize on President Javier Milei's declining

popularity and push to form a broad alliance ahead of next

year's presidential election.

Still, MSCI's index tracking currencies in the region

was down 0.6%, while the stocks gauge

was flat.

Key Latin American stock indexes and currencies at 1455 GMT:

Latin American market

prices from Reuters

Equities Latest Daily %

change

MSCI Emerging Markets 1740.7 1.18

MSCI LatAm 3079.44 0.03

Brazil Bovespa 176560.07 -0.02

Mexico IPC 69525.27 0.47

Chile IPSA 10880.9 1.25

Argentina Merval 2997083.5 2.487

6

Colombia COLCAP 2191.2 -1.66

Currencies Latest Daily %

change

Brazil real 5.0612 -0.54

Mexico peso 17.379 -0.44

Chile peso 895.21 -0.2

Colombia peso 3632.63 0.93

Peru sol 3.408 -0.1

Argentina peso (interbank) 1411 -0.07

Argentina peso (parallel) 1420 0.00

(Reporting by Avinash P and Purvi Agarwal in Bengaluru; Editing

by Emelia Sithole-Matarise)