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Trump says Israel would hand over Gaza after fighting

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China challenges Trump tariffs at WTO

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Peru to spend $3 bln in infrastructure, says economy

minister

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MSCI Latam FX up 0.7%, stocks advance 1.5%

(Updates to mid-session trading)

By Purvi Agarwal and Johann M Cherian

Feb 6 (Reuters) - Mexico's peso cut advances and local

equities rose on Thursday, after the domestic central bank

lowered borrowing costs and hinted at further easing, while most

other Latin American markets rose as concerns around a U.S.-led

global trade war abated.

Mexico's peso pared some gains and was last up 0.4% after

Banxico lowered its benchmark interest rate by 50 basis points

to 9.50%, saying it could cut by a similar magnitude at future

monetary policy meetings. Earlier in the week, data showed the

domestic economy contracted in the last quarter.

An index tracking local equities added 1.6%, while yield

on the 10-year bond dipped.

"It's no more than a movement of the policy towards a level that

is a bit more supportive for the for the domestic economy, but

at the same time not negative for the for the currency," said

Padhraic Garvey, regional head of research, Americas at ING

Financial Markets.

More broadly, MSCI's index tracking Latin American currencies

was up 0.7%, while the stocks measure

added 1.5%, trading at its highest level since

early December.

On the tariff front, an official on Wednesday said that Mexico

and the U.S. had agreed to economic dialogue in a week riddled

with changing stances on tariffs and volatile moves in exposed

economies.

However, China challenged the duties and U.S. President Donald

Trump's cancellation of a duty-free exemption for low-value

packages at the World Trade Organization.

Investors were also monitoring geopolitical conflicts after

Trump announced that the U.S. would take over the Gaza Strip

earlier in the week and as Israel ordered its army to prepare to

allow the "voluntary departure" of Gaza Palestinians.

Israel's shekel and the local stock index

and dollar bonds in the country and its neighbors were little

changed on Thursday.

In Europe, Russia's rouble rallied nearly 2%, while

Ukraine's dollar bonds added over 1 cent, on

hopes of a conclusion to the conflict after the countries said

they were in touch with the U.S. administration.

Back in South America, Brazi's real was up 0.5%,

while local stocks added 0.5%, with mining giant Vale

up 1.8%, tracking higher base metals prices.

Colombia's peso appreciated 1%, while currencies of

copper producer Chile firmed 0.9% as prices of the red

metal rose.

Peruvian stocks added 0.8%. The country's new

Economy Minister Jose Salardi said that the Andean nation would

sign commitments to spend over $3 billion over the next six

months for infrastructure projects.

Key Latin American stock indexes and currencies at 1947:

Latin American market prices

from Reuters

Equities Latest Daily %

change

MSCI Emerging Markets 1102.43 0.61

MSCI LatAm 2065.74 1.44

Brazil Bovespa 126220.07 0.55

Mexico IPC 52416.94 1.64

Chile IPSA 7301.44 0.38

Argentina Merval 2500207.1 0.908

Colombia COLCAP 1517.65 0.49

Currencies Latest Daily %

change

Brazil real 5.7697 0.48

Mexico peso 20.4807 0.41

Chile peso 961.88 0.9

Colombia peso 4128 1.09

Peru sol 3.716 -0.05

Argentina peso (interbank) 1053.75 0.02

Argentina peso (parallel) 1190 2.06