*

LatAm stocks down 0.44%; FX down 0.1%

*

Fed cuts rate by 25 bps overnight

*

Buenos Aires stocks hit one-year low

*

Chilean markets closed

*

South Africa holds interest rates at 7%

(Updates with afternoon trading)

By Pranav Kashyap and Nikhil Sharma

Sept 18 (Reuters) - Latin American assets came under

pressure on Thursday, as the U.S. Federal Reserve's measured

policy guidance failed to lift investor sentiment, while

Argentina's markets crumbled amid a pessimistic political and

financial landscape.

An index tracking regional currencies

dipped 0.1%, pressured by the strengthening dollar a day

after the Fed delivered an expected quarter-point interest rate

cut.

The central bank indicated it would steadily lower borrowing

costs for the rest of this year. Chair Jerome Powell termed

Wednesday's move as a risk-management cut, adding that he does

not feel the need to move quickly on rates.

"The message is that some members from the Fed Board

remain skeptical about the case for further easing and that has

put a lid on the currency performance in LatAm today," said

Andres Abadia, chief LatAm economist at Pantheon

Macroeconomics.

Brazil's real and stock traded with caution.

The Brazilian central bank left interest rates unchanged at 15%,

the highest since July 2006, and signaled several such pauses

until inflation moves closer to its target.

Annual inflation hit 5.13% in August, well above the

central bank's 3% target with a tolerance band of 1.5 percentage

points in either direction.

While the decision obliterated hopes for easing this year,

Brazilian Treasury sees inflation converging to the targets that

open doors in 2026.

With Brazil holding rates steady and the Fed easing, the

widening yield differential between the two economies is setting

the stage for carry trades and capital inflows into Brazil's

higher-yielding assets, a dynamic that could continue to bolster

the real.

Latin American stocks lost 0.44%, coming off

their highest level in more than one year.

Argentina markets

crashed

across the board. Buenos Aires stocks plunged 5.4%

to hit a near one-year low, taking their monthly losses to about

15% so far - among the worst in LatAm.

The Argentine peso remained stable, but near

record low, under the central bank's watch a day after it

intervened in the currency market for the first time since

April, selling $53 million from reserves after the peso weakened

past the floor of its trading band on Wednesday.

The currency has been under immense pressure as

investors rush to convert holdings into dollars amid growing

opposition to President Javier Milei's agenda in Congress ahead

of next month's congressional elections.

"If he will continue to struggle in October, all the

structural reforms that he planned probably won't see light and

that basically spells trouble for the Argentina economy," Abadia

added.

Argentina's international bonds tanked, with 2038 note

down over six cents to the dollar,

highlighting concerns about the country's ability to meet

upcoming debt obligations.

Milei's waning influence was exposed in recent

provincial elections, where opposition Peronists scored a

decisive win, triggering a sharp selloff that has yet to cool.

While the libertarian leader's "chainsaw" economics has

made progress in crushing inflation, boosting market confidence,

and reviving growth, it has also hurt public-sector pensions,

incomes and infrastructure projects.

Argentina

posted

a primary fiscal surplus of 1.56 trillion pesos ($1.154

billion) in August.

In South Africa, the central bank stood firm on interest

rates, holding borrowing costs at 7%. The rand was last

up 0.25%.

Elsewhere in Latam, Mexican stocks slipped 0.3%

and the local peso lost 0.2%. Colombia's benchmark index

fell 0.4% and peso slid 0.64%.

Chilean markets were closed for a public holiday.

Key Latin American stock indexes and currencies:

Stock indexes

Latest Daily % change

MSCI Emerging Markets 1345.03 -0.21

MSCI LatAm 2523.46 -0.44

Brazil Bovespa 145479.6 -0.08

Mexico IPC 61368.24 -0.36

Chile IPSA 9007.14 -0.65

Argentina MerVal 1686286.44 -5.45

Colombia COLCAP 1827.43 -0.37

Currencies Latest Daily % change

Brazil real 5.3073 -0.04

Mexico peso 18.3401 -0.22

Chile peso 956.5 -0.54

Colombia peso 3893.1 -0.64

Peru sol 3.482 -0.23

Argentina peso (interbank) 1,474.0 0.03

Argentina peso (parallel) 1,490.0 0