*

Brazil's services activity rises in line with forecasts in

July

*

Argentine peso eyes its worst week since December 2023

*

Fitch affirms South Africa at 'BB-'; outlook 'stable'

*

Latam stocks up 0.08%, FX up 0.41%

(Updates with afternoon trading)

By Pranav Kashyap, Twesha Dikshit and Nikhil Sharma

Sept 11 (Reuters) -

Latin American equities and currencies edged closer to a

sixth consecutive weekly gain on Friday, buoyed by mounting

expectations of U.S. interest rate cuts, while political

uncertainty shrouded

Brazil

after former President Jair Bolsonaro's

conviction

.

A gauge of Latin American currencies

rose 0.41% to a record high, marking its third straight

record-setting session. A parallel stock index

advanced 0.08% on Friday.

In Brazil, investors assessed the potential economic and

political ramifications of Bolsonaro's 27-year, three-month

prison

sentence

for plotting a coup to retain power following his 2022

electoral defeat.

Despite political unrest, Brazil's local currency, the

real, remained resilient, climbing 0.7% to its highest

level in over a year.

"The market's reaction so far suggests it was expecting

this court verdict, even though the possibility of turbulence

and short-term political instability has risen, which could

increase risk premia," Dev Ashish, senior Latin America

economist at Societe Generale, said in a note.

Fresh data

showed

Brazil's services sector

expanded

for the sixth consecutive month in July, defying a tight

monetary policy environment.

While August's inflation data showed a negative monthly

reading, the central bank emphasized the need to maintain

restrictive interest rates for an extended period, due to

persistent price pressures that remain above the 3% target,

which includes a tolerance band of 1.5 percentage points on

either side.

The central bank is widely expected to hold rates steady

at its policy meeting next week.

"There is still little resolution to where the political

dynamic in Brazil will take us, but the short-term risks to

overall sentiment remain high under the prospect of new

sanctions from the U.S.," said Thierry Wizman, global FX and

rates strategist at Macquarie.

Meanwhile, the Mexican peso held steady for the day,

while the country's main stock index gained 0.46% to

reach an all-time high, both poised for strong weekly advances.

Latam currencies and equities this week benefited from a

weaker U.S. dollar, following data that pointed to a softening

labor market and reinforced expectations for a Federal Reserve

interest rate cut in September.

However, Argentine assets remained under pressure after

President Javier Milei's defeat in Sunday's Buenos Aires

provincial election, raising concerns over the viability of his

austerity agenda ahead of October's midterms.

Buenos Aires stocks fell 3.2% on Friday, heading

for their worst weekly performance in more than five months. The

local peso dropped 1.4% to a fresh record low,

marking its seventh consecutive losing session and its worst

week since December 2023.

Colombia's peso was on track for a seventh straight

weekly gain - its longest run since December 2020, while the

stock index recorded a weekly loss.

Elsewhere, Russia's central bank trimmed interest rates

by 100 basis points to 17%, a smaller reduction than expected,

citing stubbornly high inflation and elevated expectations.

Currency ruble ended 0.6% higher on Friday but was down

3.4% for the week.

Meanwhile, Fitch affirmed South Africa's credit rating at

'BB-' with a "stable" outlook, highlighting persistent growth

challenges due to a sluggish recovery in logistics, weak

investment levels and uncertainty surrounding external trade

relations.

Key Latin American stock indexes and currencies:

Stock indexes

Latest Daily % change

MSCI Emerging Markets 1324.9 1.13

MSCI LatAm 2484.25 0.08

Brazil Bovespa 142319.36 -0.58

Mexico IPC 61825.69 0.46

Chile IPSA 8989.72 -1.77

Argentina MerVal 1747749.59 -3.2

Colombia COLCAP 1844.52 -0.54

Currencies Latest Daily % change

Brazil real 5.353 0.68

Mexico peso 18.436 0.02

Chile peso 953.9 -0.4

Colombia peso 3896.5 -0.23

Peru sol 3.4909 -0.09

Argentina peso (interbank) 1,453.0 -1.40

Argentina peso (parallel) 1,405.0 0.35