* MSCI LatAm FX, stocks set for monthly gains

* Japan's yen surges across the board on intervention, report says

* Colombia cenbank unexpectedly leaves interest rates unchanged

* Mexico's economy contracts more than expected

(There will be no Latin American market report on Friday on account of Labor Day. Reuters will

resume coverage on Monday, May 4)

By Purvi Agarwal, Avinash P and Johann M Cherian

April 30 (Reuters) - Indexes tracking major Latin American stocks and currencies edged

higher on Thursday and were set for monthly gains, as hopes for a resolution to the Middle East

conflict boosted risk appetite in April, while the U.S. dollar weakened after reports of

Japanese intervention in the forex market.

MSCI's indexes tracking regional currencies and stocks edged

up 0.5% and 1.9% higher, respectively.

The indexes were on track for monthly gains as hopes for a peace deal between the

U.S.-Israel and Iran supported risk sentiment. However, investors turned cautious towards the

end of the month as there were no signs of a resolution on the horizon.

Crude prices were around four-year highs as shipping through the Strait of Hormuz remained

shut, raising inflation risks. Markets were also bracing for any potential escalation.

Meanwhile, investors were focused on other areas of the foreign exchange market as sources

told Reuters that Japan had intervened to prop up the ailing yen, its first official

intervention in nearly two years.

The yen jumped 2.4% to 156 per dollar and was also up over 1% against major Latin American

currencies such Brazil's real and Chile's peso, while it strengthened

about 4% versus Colombia's peso.

The yen's persistently low yields make it a natural funding currency, while Latin America's

high real interest rates offer some of the most attractive carry opportunities globally

The yen "hasn't been appreciating, it's been depreciating. There should be a cushion

build-up in terms of past performance at the yen," Padhraic Garvey, regional head of research,

Americas at ING.

"Now, if it (yen) appreciates in a very dramatic sense. If we go from 160 to 140, for

example, and if you're on the wrong side of that trade, that's going to be a pain."

Garvey added that domestic factors in Latin American economies were a bigger factor for

markets.

Colombia's peso depreciated 1.4%, after the local central bank surprised investors by

holding its benchmark interest rate at 11.25%, while investors were anticipating a rate hike.

Local equities market added 1.2%.

Brazil's real strengthened 0.8% against the dollar, a day after its central bank

trimmed interest rates by 25 basis points, as expected. The local stocks were up 1.7%

Mexico Peso firmed 0.3% and the benchmark share index added 0.9%. The economy

contracted 0.8% in the first quarter from the previous three-month period, wider than

expectations for a 0.5% contraction, data showed.

Latin American market

prices from Reuters

MSCI Emerging Markets 1604.47 -0.86

MSCI LatAm 3196.04 1.92

Brazil Bovespa 187868.59 1.69

Mexico IPC 67683.23 0.87

Chile IPSA 10962.95 0.98

Argentina Merval 2847451.8 0.304

4

Colombia COLCAP 2171.13 1.22

Brazil real 4.9554 0.81

Mexico peso 17.4637 0.35

Chile peso 897.97 0.86

Colombia peso 3673.93 -1.45

Peru sol 3.5075 0.44

Argentina peso (interbank) 1394 -0.14

Argentina peso (parallel) 1380 2.54