* MSCI LatAm stocks down 0.3%, FX down 0.4%

* Brazil's industrial production falls in June

* Colombian peso firms after sharp losses on Monday

(Updates to afternoon trading levels)

By Utkarsh Hathi

Aug 4 (Reuters) - Stocks in resource-rich Latin America fell

on Tuesday as gains from higher metal prices were outweighed by

a sharp drop in oil, while currencies traded mixed against the

dollar.

MSCI's index tracking regional equities and

its currencies equivalent edged down 0.3% and

0.4%, respectively.

Latin American assets have rallied this year as the region's

commodity exporters captured windfall gains across metals and

energy.

Copper prices climbed to a two-month high as inventories

outside the U.S. declined, while precious metals advanced as

lower oil prices reduced expectations for an interest-rate hike

by the U.S. Federal Reserve.

Mexican miner Grupo Mexico advanced 2.6% to

its highest in more than a month, tracking copper prices.

Mexican benchmark rose 0.3%.

Chile's Peso strengthened more than 1.5% to its

highest level in over a month, even as stocks in the

world's largest copper producer fell 0.3%.

Oil prices fell to a three-week low, below $80-a-barrel

mark, after Qatari and U.S. officials raised hopes for a

diplomatic resolution to the Iran war. The decline weighed

on major energy firms.

Ecopetrol slipped 3.5% and dragged Colombian

equities 0.8% lower.

Among currencies, the Colombian peso firmed 0.9%

after logging its biggest decline in over a year in the previous

session, following the central bank's surprise announcement to

build up its international reserves.

In Brazil, industrial production registered its biggest

month-on-month drop since late 2025 in June, data showed,

reinforcing expectations for a rate cut from the central bank,

which starts its policy meeting later in the day.

"The data reinforce our view that Brazil's industrial

recovery is losing momentum. Restrictive financial conditions

remain the principal headwind," said Andres Abadia, chief LatAm

economist at Pantheon Macroeconomics.

Abadia, however, said persistent inflation and

still-elevated inflation expectations argue against an

aggressive pace of rate cuts.

The Brazilian real declined 0.9% to a three-week low,

while stocks dipped 0.1%, with state-run oil firm

Petrobras falling 1.1%.

Markets are also bracing for impact from a severe El Nino

that could impact food production and energy generation and

potentially drive inflation, with countries such as Colombia,

Peru and Brazil most exposed.

Analysts at Bank of America Global Research estimate that

the weather phenomenon puts around 35% of Argentina's wheat

output at risk, while Brazil's corn production could decline by

around 10% year-on-year.

In Mexico, mining industry is expecting a rebound in

investment in 2026, as firms focus on expanding mines and

purchasing equipment.

The country's central bank is expected to hold its benchmark

interest rate at 6.50% in its next decision on Thursday, a poll

showed. The peso traded 0.4% higher.

Meanwhile, shipping activity in Argentina's grain port has

been halted due to a strike by maritime workers following a

government decree deregulating river navigation services. The

country is one of the world's leading grain suppliers.

The Argentine peso dipped 0.1%, while its stocks

fell 2.6%.

Key Latin American stock indexes and currencies

Latin American market

prices from Reuters

Equities Latest Daily %

change

MSCI Emerging Markets 1652.89 0.09

MSCI LatAm 3078.91 -0.27

Brazil Bovespa 177863.69 -0.08

Mexico IPC 66867.81 0.26

Chile IPSA 11017.21 -0.29

Argentina Merval 3188451.5 -2.626

3

Colombia COLCAP 2365.75 -0.79

Currencies Latest Daily %

change

Brazil real 5.1338 -0.91

Mexico peso 17.2514 0.43

Chile peso 911.15 1.51

Colombia peso 3198.37 0.86

Peru sol 3.3931 -0.17

Argentina peso (interbank) 1496 -0.10

Argentina peso (parallel) 1525 1.97