*

Lawmakers reject Colombian government's 2025 budget

proposal

*

Moody's: Mexico's judicial reform could impact sovereign

rating

*

FX rises 1.1%, stocks add 1.5%,

(Updated at 1940 GMT)

By Johann M Cherian and Shubham Batra

Sept 12 (Reuters) -

The Mexican peso jumped for a second straight day on

Thursday against a softer U.S. dollar supported by higher oil

prices, while regional stocks hit a nearly three-week high after

Vale closed a deal over Brazil dam collapse in October.

MSCI's index of Latam currencies rose 1.1%,

with the Mexican peso leading the charge, rising 1.5%,

tracking higher oil prices.

Mexico's Senate on Wednesday approved a sweeping judicial

reform, which Moody's warned could have significant implications

for the nation's sovereign credit rating.

Despite Banxico being one of the last central banks in the

region to begin its monetary policy easing cycle, the peso has

underperformed peers, as investors priced in the likelihood of

weak checks and balances in the region's second biggest economy.

"Mexican President Andres Lopez Obrador's move undermines

investor confidence," said a group of analysts led by Antje

Praefcke at Commerzbank.

"It is also questionable whether the law violates the North

American Trade Agreement (USMCA). Under these conditions, the

peso is likely to remain under downward pressure," they added.

Brazil's real rose 0.8% on lagging iron ore prices

which hit a one-week high on prospects of improved seasonal

demand in China . But the currency is down 13.7%

year-to-date on concerns that debt-financed fiscal spending

could risk the stability of the region's biggest economy.

Brazil's Finance Minister said on Thursday that President

Luiz Inacio Lula da Silva has requested studies to ensure that

by the end of 2026 an income tax exemption will be applied to

earnings up to 5,000 reais ($880) a month.

The currencies of copper producers Chile firmed 0.9%

and Peru edged 0.2% higher, tracking higher prices of the

red metal.

Colombia's peso was over 1% higher against the

greenback. The Senate's economics committee rejected the

government's proposed 2025 budget, arguing that the country will

not be able to raise the proposed sum due to

lower-than-projected tax collection.

Concerns around the oil exporter's increased risk to fiscal

stability due to a collapse in tax collection has weighed on the

peso - down 9% year-to-date and close to a one-year low.

MSCI's equities index surged 1.5%, led by

1.6% rise in the Mexican shares that were at their

highest level since July 31.

Both indexes were, however, on track for losses year-to-date

as global growth worries have dimmed the demand outlook for

commodities, which are the region's top exports.

Seven of the top ten stocks, which constitute over 40%

weightage on the regional stocks index, were trading higher.

While Brazil's benchmark index slipped 0.5%, miner

Vale jumped 1.5% as it expects to reach a final

agreement with authorities in October regarding reparations

related to the collapse of a dam in the city of Mariana.

Key Latin American stock indexes and currencies:

Stock indexes Latest Daily YTD %

% change

change

MSCI Emerging 1077.10 1.74 3.32

Markets

MSCI LatAm 2218.37 1.46 -17.89

Brazil Bovespa 134214.65 -0.34 0.02

Mexico IPC 51991.29 1.55 -9.40

Chile IPSA 6343.13 0.65 2.35

Argentina MerVal 1790663.8 1.504 92.61

7

Colombia COLCAP 1318.18 0.63 10.25

Currencies Latest Daily YTD %

% change

change

Brazil real 5.6213 0.49 -41.06

Mexico peso 19.4931 1.50 1.06

Chile peso 931.5 0.85 -34.02

Colombia peso 4205.86 1.09 -29.10

Peru sol 3.7591 0.20 -13.89

Argentina peso 959.5000 -0.16 -98.06

(interbank)

Argentina peso 1260 1.98 -98.47

(parallel)

(Reporting by Johann M Cherian and Shubham Batra in Bengaluru)