* MSCI Latin American stocks down 0.4%, FX up 0.2%

* Mexico's central bank hold rates at 6.50%

* Brazil's finance minister says bringing rates down a

challenge

(Updates to afternoon trading levels)

By Utkarsh Hathi and Avinash P

August 6 (Reuters) - Most Latin American currencies gained

on Thursday, as growing optimism over the resumption of energy

supplies from the Middle East and firmer commodity prices lifted

sentiment, while the Mexican central bank held rates steady as

expected.

Iran and Oman reached an understanding on Wednesday on

coordinates for a shipping route through the Strait of Hormuz,

though talks were ongoing.

Oil prices rose as caution lingered about the talks' outcome

and whether they will lead to the restoration of crude supplies

through the waterway.

"What happens geopolitically, including developments around

Iran and the Strait of Hormuz, matters a lot. Higher commodity

prices support exports, trade balances and currencies," said

Fernando Ferreira, chief strategist at XP Inc.

"But if oil prices stay high, that could impact inflation

expectations, result in higher interest rates and slower

growth."

The U.S. dollar index gained 2.9% on Thursday, ahead

of jobs data due on Friday, as markets shifted focus to economic

data in the absence of any forward guidance from the Federal

Reserve.

MSCI's index tracking Latin American equities

declined 0.4% and was headed for a fifth

straight session of losses, while the currency equivalent

edged 0.2% higher.

Assets in the region's second-largest economy, Mexico, were

little changed after the central bank left its key interest rate

unchanged at 6.50%.

The peso and equities traded range-bound.

Analysts at ING expect the Mexican peso to remain stable in

the absence of any further Fed rate hikes, though they warned

that any trouble in Mexican trade negotiations with the U.S.

could pressure the currency.

In Brazil, Finance Minister Dario Durigan said bringing

interest rates down remains a "big challenge," a day after the

central bank delivered a fourth straight 25-basis-point rate cut

and left the door open for more cuts.

The Brazilian real appreciated 0.4%, while the

country's stocks declined 0.9%, weighed by a 1.4% fall

in miner Vale .

Investors are also keeping close watch on Brazil's

presidential election campaign ahead of the October vote.

"Brazil's high carry remains attractive, but investors will

have to be attentive to political news in the run-up to the

presidential elections in early October," said Chris Turner,

global head of markets at ING, referring to the high interest

rate on real-denominated assets.

Mining and oil company executives in Colombia said the

industry is ready to invest billions of dollars in new

exploration, but expect quick action from the incoming

government to remove regulatory obstacles.

Colombian equities rose 0.7%, led by a 5.4%

advance in energy company Ecopetrol, while

Colombia's currency edged 0.8% higher.

The Chilean benchmark gained 1.3%, tracking higher

copper prices.

Analysts slashed their 2026 economic growth forecast for

Argentina while also lowering inflation expectations, a central

bank survey showed.

The local peso and stocks in Buenos Aires

declined 0.2% and 0.7%, respectively.

Key Latin American stock indexes and currencies

Latin American market

prices from Reuters

Equities Latest Daily %

change

MSCI Emerging Markets 1658.75 -1.68

MSCI LatAm 3070.44 -0.44

Brazil Bovespa 176145.28 -0.89

Mexico IPC 66472.34 -0.08

Chile IPSA 11305.43 1.32

Argentina Merval 3134099.9 -0.704

3

Colombia COLCAP 2362.06 0.74

Currencies Latest Daily %

change

Brazil real 5.101 0.38

Mexico peso 17.2019 0.05

Chile peso 913.39 -0.04

Colombia peso 3149.5 0.83

Peru sol 3.3777 0.22

Argentina peso (interbank) 1499.5 -0.20

Argentina peso (parallel) 1510 1.99