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Brazil's real hits two-week high

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Weak copper prices weigh on Peru, Chile's FX

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Mexico, Peru policy decision due on Thursday

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Latam stocks up 1%, FX up 0.5%

(Updated at 3:03 p.m. ET/1903 GMT)

By Lisa Pauline Mattackal and Ankika Biswas

Aug 7 (Reuters) -

The Mexican peso jumped against the dollar on Wednesday, a

day ahead of key inflation data and a monetary policy decision,

with most Latin America assets continuing to recover lost ground

after a recent sell-off intensified at the start of the week.

Mexico's currency gained over 1%, stabilizing

after a four-day decline, recovering from a near two-year low

touched on Monday.

As a key beneficiary of yen-funded carry trades, where

investors borrowed cheaply in the Japanese currency to invest in

higher-yielding ones, the peso was one of the worst hit as yen

gains saw many of those trades unwind. Despite the day's gains,

the peso remains around lows last seen in March 2023.

The country's inflation figures are due on Thursday,

right ahead of a central bank decision wherein the interest rate

is

expected to be held steady

at 11% amid price pressures and the peso's recent weakness.

"The good news for Mexico is we expect the U.S. Federal

Reserve to cut rates in September, easing pressure on the

currency," said Andres Abadia, chief Latin America economist at

Pantheon Macroeconomics.

"But as a bellwether for EM currencies, any bad news in

terms of a risk-off environment will hurt it."

The MSCI currencies index edged up to a

near one-week high, with Brazil's real also gaining 0.7%

and hitting a two-week high intraday.

Benchmark stock indexes in Brazil and Mexico

gained 0.4% each, with the MSCI stocks gauge

also in recovery to hit a near one-week high. Meanwhile,

Argentina's stocks reversed early course and fell 0.6%.

The equity market in Colombia was closed for a public

holiday.

Meanwhile, a near 2% drop in copper prices hit top exporter

Peru's sol, down 0.7%, and kept the Chilean peso

around the flat line.

Peru's monetary policy decision is also due on Thursday.

In July, its central bank held interest rate in a second

consecutive monthly pause, citing stubborn core inflation.

Some of the other economic data on investors' radar for

the week included Chile, Colombia and Brazil's respective

inflation data and Mexico's industrial output.

Elsewhere, El Salvador's sovereign bonds rallied a day after

the International Monetary Fund said the two sides had made

headway in talks toward a fund-supported loan program.

Nigeria's central bank

sold $876.26 million

at 1,495 naira to the dollar at its first retail auction

for end users, firmer than where the currency is trading at on

the official market.

Key Latin American stock indexes and currencies at 1903 GMT:

MSCI Emerging Markets 1050.15 1.87

MSCI LatAm 2155.97 0.99

Brazil Bovespa 126758.22 0.39

Mexico IPC 52600.4 0.38

Chile IPSA 6185.44 0.11

Argentina Merval 1448733.47 -0.606

Colombia COLCAP 1296.79 0.17

Brazil real 5.6236 0.68

Mexico peso 19.2539 1.59

Chile peso 943.7 0.02

Colombia peso 4135.5 0.07

Peru sol 3.7328 -0.71

Argentina peso (interbank) 935.5 0.053447354

Argentina peso (parallel) 1365 0.732600733