* LatAm stocks up 1%, FX gain 0.2%

* Peru stocks surge amid tight presidential race

* Mexico inflation slows in May

* Brazil renews fuel tax exemptions, Finance Minister

Durigan says

(Updates with afternoon levels)

By Avinash P and Ragini Mathur

June 9 (Reuters) - Latin American assets snapped a

four-session losing streak as investors on Tuesday weighed a

fragile Iran-Israel ceasefire and hopes for de-escalation in the

Middle East, while Peru's stocks headed for their best day in

over two years.

MSCI's index of Latin American stocks gained

1%, while the gauge of regional currencies edged

up 0.2%.

The mood remained cautious, however, after fresh hostilities

threatened to unravel the tentative truce. U.S. President Donald

Trump said Iran had shot down a U.S. Apache helicopter in the

Strait of Hormuz and vowed to respond.

Israel, meanwhile, struck the historic southern Lebanon port

city of Tyre, killing at least eight people. Iran and Israel had

announced a halt in attacks on each other on Monday.

Investors were wary as diplomacy has so far failed to

produce a peace deal or reopen the Strait of Hormuz, a vital

artery for global oil supplies.

The U.S. Dollar traded in flat to lower range, aiding

LatAm currencies.

Peru commanded the most attention. The country's

presidential race tightened dramatically overnight, with

candidates separated by less than 0.1% as overseas ballots swung

the count back toward conservative Keiko Fujimori, sending

markets surging.

Lima's stock index jumped 4.6%, its

biggest one-day gain since late 2023, while the sol

surged 2.2%.

"The slower official count shows Fujimori in the lead. If

the quick count is confirmed, a Sánchez victory would run

counter to our baseline economic outlook," said Debora Reyna,

economist at Oxford Economics.

"A potential Sánchez administration wouldn't hold a majority

in Congress, forcing it to build consensus to pass reforms."

In Mexico, the annual inflation rate decelerated for a

second month in a row in May, official data showed, returning to

the higher end of the central bank's target.

Mexico's stocks were down 0.5% and the peso

appreciated 0.1%.

"The larger-than-expected fall in Mexican inflation, to 3.9%

y/y in May, will be welcomed by Banxico," said Kimberley

Sperrfechter, senior emerging markets economist at Capital

Economics.

"Barring a major escalation in the Iran conflict and a sharp

rise in energy prices, we think that rates will be left

unchanged at 6.50% for the foreseeable future."

Brazil's Bovespa index added 0.7% and the real

gained 0.3%. Brazil's government plans to take action to

curb the Middle East conflict's effect on fuel prices as long as

it continues, Finance Minister Dario Durigan said.

Last month, the administration had renewed fuel tax

exemptions and subsidies ahead of President Luiz Inacio Lula da

Silva's reelection bid later this year.

Key Latin American stock indexes and currencies:

Stock indexes Latest Daily % change

MSCI Emerging Markets 1709.22 3.26

MSCI LatAm 2881.74 1.04

Brazil Bovespa 169802.11 0.67

Mexico IPC 65335.22 -0.48

Chile IPSA 10503.15 3.37

Argentina MerVal 3142677.89 0.99

Colombia COLCAP 2252.33 2.71

Currencies Latest Daily % change

Brazil real 5.1786 0.29

Mexico peso 17.4417 0.09

Chile peso 915.97 0.65

Colombia peso 3567.21 0.61

Peru sol 3.3886 2.2

Argentina peso 1,441.0 0.38

(interbank)

Argentina peso (parallel) 1,440.0 0.35

(Reporting by Avinash P and Ragini Mathur in Bengaluru

Editing by Nick Zieminski and Joyjeet Das)