*

Brazil says U.S. trade deal may not happen before tariff

deadline

*

Brazilian central bank to hold dollar auction

*

IMF approves $1 billion in funding for Ecuador, dollar

bonds up

*

MSCI's Latin American currencies index flat, stocks off

0.1%

(Updates with afternoon trading levels)

By Purvi Agarwal and Ragini Mathur

July 21 (Reuters) -

Most Latin American currencies firmed against the dollar on

Monday, while regional stocks showed mixed performance as

investors awaited more details on U.S. trade policy ahead of a

looming tariff deadline.

The dollar index, which measures the greenback

against a basket of major currencies, slipped 0.5% on the day,

retreating from strong gains posted last week.

"If it does turn out that the U.S. economy is proving

resilient to what Trump is doing, then we could see the dollar

reverse as the U.S. exceptionalism theme returns," said Brad

Bechtel, global head of currencies at Jefferies.

The greenback has faced headwinds this year on concerns

over U.S. President Donald Trump's unpredictable trade policies,

though robust U.S. economic data helped drive last week's rally.

Among the region's major currencies, Chile's peso

rose 1% - the most among its peers - aided by a rise in copper

prices, after China's

industry ministry

vowed to stabilise the machinery, autos and electrical

equipment sectors.

The Mexican peso appreciated 0.4%, while

Colombia's peso was tracking a drop in crude oil prices

and shed 0.4%.

Brazil's real was up 0.2%, tracking a rally in iron

ore prices following top consumer China's announcement.

Brazilian Finance Minister Fernando Haddad acknowledged

the country may fail to reach a trade deal with the U.S. by

President Donald Trump's August 1 deadline, but said the two

sides were still locked in negotiations.

"If the tariffs persist, the impact on Brazil will be

limited as it's true that total exports from Brazil to the U.S.

represent only 2% of GDP but we are paying close attention to

the potential impact on real. It will also increase uncertainty,

hitting CapEx," said Andres Abadia, chief Latam economist at

Pantheon Macroeconomics.

Earlier this month, Trump proposed 50% tariffs on

Brazilian imports, linking them to Brazil's treatment of former

President Jair Bolsonaro, who faces coup-plotting charges after

losing the 2022 election to current President Luiz Inacio Lula

da Silva.

Despite tariff risks, the country's economy is expected

to stay on a gradual growth path this year, a Reuters poll of

economists found.

Brazil's central bank said it will hold a dollar auction

with a repurchase agreement for up to $600 million on July 22.

Among stocks, Brazil's Bovespa equities index was up

0.6%.

The main index in Mexico slipped 0.8%.

The U.S. Transportation Department said on Saturday it

would respond to Mexico's decision to cut flight slots and

relocate cargo operations in Mexico City, affecting U.S.

airlines. On Monday, Mexican President Claudia Sheinbaum

said

she sees no justification for such sanctions.

MSCI's index tracking Latin American stocks

slipped 0.1%, while the regional currencies gauge

flat.

The International Monetary Fund said on Friday it had

completed its second review of Ecuador's Extended Fund Facility

and approved an augmentation of the program by about $1 billion.

Dollar bonds in the South American country were broadly

higher on Monday, with those maturing in 2035

up 1.4 cents on the dollar, extending gains

from Friday.

Key Latin American stock indexes and currencies:

Latin American market prices

from Reuters

MSCI Emerging Markets 1254.84 0.44

MSCI LatAm 2246.8 -0.14

Brazil Bovespa 134130.84 0.56

Mexico IPC 55826.61 -0.79

Chile IPSA 8149.88 -0.44

Argentina Merval 2052511.19 -1.097

Colombia COLCAP 1743.56 0.58

Brazil real 5.5654 0.23

Mexico peso 18.6568 0.4

Chile peso 953.5 0.94

Colombia peso 4039.5 -0.35

Peru sol 3.5593 0.16

Argentina peso (interbank) 1273

1.01

Argentina peso (parallel) 1300 0.38

(Reporting by Purvi Agarwal, Ragini Mathur and Johann M Cherian

in Bengaluru; Editing by Paul Simao and Anil D'Silva)