* MSCI LatAm FX, stocks mixed with all eyes on US-China

summit

* Brazil's real recovers after logging its worst since

December

* Venezuelan bonds rally after debt restructuring process

launched

(Updates with afternoon trading levels)

By Johann M Cherian, Avinash P and Purvi Agarwal

May 14 (Reuters) - Latin American currencies and stocks

were mixed on Thursday as investors tracked developments from

the U.S.-China summit, while also assessing Venezuela's decision

to launch a sovereign debt restructuring nearly a decade since

its default.

Global attention was on the two-day meeting between U.S.

President Donald Trump and his Chinese counterpart Xi Jinping in

Beijing that has shown initial signs of progress. Investors were

scouring for any clues that China could convince Iran to sign a

peace deal with Washington after weeks of an uncertain

ceasefire.

Both the economic super powers have been vying for a greater

influence in Latin America, given its significance as a major

commodities exporter.

Brazil's real was up 0.4% at 4.99 per dollar, after

the currency logged its steepest one-day fall since early

December on Wednesday, while the local stock index added

0.8%.

Brazilian assets were rattled in the previous session after

a report alleged ties between Senator Flavio Bolsonaro and a

scandal-hit banker, with some speculating it could tip the

balance of a close presidential race.

Allies of the senator scrambled to play down ties to a

jailed banker on Thursday, and tried to minimize its importance

for the presidential election.

"We believe that the dynamics underlying the election could

shift significantly from this point onward, particularly given

the public sensitivity toward corruption issues and the growing

prominence of the Banco Master case in Brazil's media coverage,"

said a group of FX and rates strategists at Macquarie led by

Thierry Wizman.

Brazil has faced high interest rates and deteriorating

public finances under the current administration, which prompted

analysts to anticipate a more market-friendly government.

Meanwhile, copper producer Chile's peso slipped 0.7%

to hit a three-week low, pressured by declining prices of the

red metal, while Mexico's peso dipped 0.3%.

Other currencies such as Peru's sol was flat ahead of

a monetary policy decision later in the day, as was Colombia's

peso.

VENEZUELA DEBT RESTRUCTURING HOPES RISE

Venezuela's international bonds rallied after the country

launched what is widely expected to be one of the biggest and

most complex sovereign debt restructuring exercises.

The country's interim central bank president Luis Perez said

restructuring its sovereign debt and that of state oil firm

PDVSA would bring the country "out of the shadows" of the global

financial system.

The U.S. issued a sanctions waiver earlier this month,

called the general license (GL) 58 that opened the door for the

restructuring.

"They need to retain a credible financial advisor in the

sovereign advisory space. They already have legal counsel but

they likely need to bring on more resources," said AJ Mediratta,

partner at Greylock Capital Management.

Its 2027 and defaulted 2022 maturities

gained over 1.5 cents on the dollar each.

In Colombia, the country's financial watchdog announced

investigations into private pension funds for failing to

transfer resources to state-run pension administrator

Colpensiones as directed by a top administrative court's

decision last month.

Local stocks outperformed peers, up 3% and on

track to log their biggest one-day jump in more than a month,

with oil company Ecopetrol gaining 2.9%.

Mexican stocks fell 1.6%, the most among peers.

Elsewhere, Iraqi officials approached the International

Monetary Fund about securing financial assistance as a result of

the Iran war, Reuters reported.

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

Equities Latest Daily %

change

MSCI Emerging Markets 1715.79 0.62

MSCI LatAm 3098.72 -0.66

Brazil Bovespa 178518.59 0.8

Mexico IPC 69061.24 -1.6

Chile IPSA 10456.73 0.59

Argentina Merval 2756736.5 0.671

8

Colombia COLCAP 2134.86 2.96

Currencies Latest Daily %

change

Brazil real 4.9881 0.44

Mexico peso 17.217 -0.29

Chile peso 893.84 -0.71

Colombia peso 3777.8 0.05

Peru sol 3.421 -0.13

Argentina peso (interbank) 1390.5 0.14

Argentina peso (parallel) 1400 1.43