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Latam stocks up 1.37%, FX up 0.64%

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US August nonfarm payrolls below expectations

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Colombia CPI due later in the day

(Updates with afternoon trading)

By Pranav Kashyap, Twesha Dikshit and Nikhil Sharma

Sept 5 (Reuters) - An index tracking Latin American

currencies hit a record high on Friday, capitalising on a weaker

dollar after a soft U.S. nonfarm payrolls report solidified

expectations for an interest rate cut by the Federal Reserve.

A 0.64% rise in a gauge tracking the region's currencies

kept it on pace for its fifth-straight weekly

rise on Friday. The dollar index was trading 0.5% lower.

A parallel gauge for stocks surged 1.4%,

hitting its highest in more than a year - also set for its fifth

consecutive monthly advance.

Mexican, Chilean and Brazilian stocks

were all trading at record highs.

Data from the U.S. showed jobs growth weakened sharply,

while the unemployment rate increased to 4.3%, confirming that

labor market conditions were softening, reinforcing the case for

a Fed rate cut this month.

Traders now see about 70 basis points worth of rate cuts by

year-end, LSEG data showed.

Among local notes, Brazil's real was among the top

winners for the day, up 0.6%. The strong moves came despite data

showing a 0.3% drop in July producer prices - marking the sixth

consecutive monthly decline and underscoring how elevated

borrowing costs are weighing on the economy.

Separately, Brazilian President Luiz Inacio Lula da Silva

announced a 12 billion reais ($2.21 billion) debt renegotiation

package aimed at supporting up to 100,000 agricultural

producers, primarily small- and medium-sized farmers affected by

recent climate events.

Heading into the weekend, investors kept a close eye on

Argentina, where President Javier Milei faces a test of local

elections ahead of the much-anticipated October midterms amid

increasing pressure over a bribery scandal.

"A poor showing for Argentine President Milei's party in the

local election in the province of Buenos Aires on Sunday would

probably put renewed downward pressure on the peso," Kimberley

Sperrfechter, emerging markets economist at Capital Economics,

said in a note.

The country's peso was stable heading into the

weekend but continued to trade near a record low. It has lost

more than 30% year-to-date, prompting the Treasury to intervene

in the FX market to stabilize the currency - a move at odds with

Milei's free-market ideology.

Argentina's Merval index was up 1.14% for the day,

on track for its first weekly advance in four. However, it has

lagged regional peers in 2025.

The Colombian peso rose 0.6%, inching towards its

sixth successive weekly advance, its longest such streak in over

three years - ahead of CPI data due later in the day, where

expectations are for a 0.2% rise in inflation.

Colombia's international dollar bonds rallied on Friday

after a group of banks announced the results of a deal to

repurchase over $5 billion of debt.

The 2035 issue gained 1.8 cents to trade at

107.228 cents on the dollar.

Meanwhile, in Central and Eastern Europe, Ukraine's

sovereign dollar bond slid more than 1 cent amid fading hopes of

an imminent ceasefire or peace deal taking place.

Key Latin American stock indexes and currencies:

Stock indexes Latest Daily % change

MSCI Emerging Markets 1277.05 1.23

MSCI LatAm 2437.48 1.37

Brazil Bovespa 142653.57 1.18

Mexico IPC 60389.81 0.87

Chile IPSA 9222.9 0.52

Argentina MerVal 2012957.67 1.14

Colombia COLCAP 1858.49 0.25

Currencies Latest Daily % change

Brazil real 5.4127 0.61

Mexico peso 18.6933 0.15

Chile peso 964.25 0.78

Colombia peso 3956 0.65

Peru sol 3.52 0.14

Argentina peso (interbank) 1,364.0 -0.07

Argentina peso (parallel) 1,350.0 1.1