(Updated at 1432 GMT)

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IMF says emerging market capital inflows recover to 2018

levels

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Fiscal expansion not good for Brazil at the moment, Haddad

says

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Argentine inflation data due at 1900 GMT

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Latam stocks up 0.3%, FX off 0.1%

By Johann M Cherian

July 12 (Reuters) - Most Latin American currencies

strengthened on Friday, with Peru's sol hitting its highest

level in a month after the central bank left borrowing costs

unchanged, while regional stocks were set for their biggest

weekly jump in seven months.

Peru's central bank held its benchmark interest rate steady

at 5.75% on Thursday for the second policy meeting in a row, as

expected, after annual inflation rose slightly to 2.29% last

month.

The sol appreciated 0.8% on Friday. It is down 0.9%

year-to-date, but less than its regional peers.

"Inflation will remain within the target range and, together

with the incipient recovery of economic activity, (it) will give

the central bank room to implement additional cuts to the policy

rate in the coming months, although with some extra pauses,"

said Hugo Vega, senior economist at BBVA Research said.

In contrast, Brazil's real weakened 0.4% for the

second straight day as investors assessed remarks by Finance

Minister Fernando Haddad, who underlined that fiscal expansion

was not a good thing for the country.

Investor sentiment was rattled late last month, sending the

real down to over two-year lows, on concerns around high fiscal

deficits and central bank independence in the region's biggest

economy.

Meanwhile, the International Monetary Fund said that gross

capital inflows into emerging markets excluding China last year

rose to $110 billion or 0.6% of their economic output, the

highest level since 2018.

Oil exporters Mexico's peso and Colombia's peso

firmed 0.5% and 0.6%, respectively, as crude prices got a

lift on demand hopes.

The Mexican currency is set for its second straight week of

gains, up over 2%, supported by the highest interest rate for

any of the more popularly traded free-floating currencies,

offering better returns than the dollar.

The world's largest copper producer Chile's peso

inched up 0.2%, and was poised for its biggest weekly gain of

nearly 3% in two months as prices of the metal ticked higher.

On the equities side, MSCI's index tracking regional bourses

dipped 0.1%, though Brazil's Bovespa

eked a 0.2% gain.

The MSCI equities index is up 3.6% for the week and is on

track for its biggest weekly jump in seven months.

Mexico's main index climbed 0.4%, while Colombia's

Colcap lost 0.4%.

Argentina's MerVal index was flat ahead of June

inflation data later in the day.

Key Latin American stock indexes and currencies at 1437 GMT:

Latin American market

prices from Reuters

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1124.57 -0.03

MSCI LatAm 2320.02 0.31

Brazil Bovespa 128536.71 0.19

Mexico IPC 54705.35 0.52

Chile IPSA 6546.30 0.03

Argentina MerVal 1699938.57 -0.336

Colombia COLCAP 1371.55 -0.35

Currencies Latest Daily %

change

Brazil real 5.4454 -0.07

Mexico peso 17.6763 0.51

Chile peso 911.9 0.25

Colombia peso 3948.5 0.67

Peru sol 3.7389 0.19

Argentina peso 919.0000 0.05

(interbank)

Argentina peso 1460 0.34

(parallel)