(Updated at 1500 GMT)

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Lula backs spending cuts to meet Brazil's fiscal framework

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Chilean central bank releases June policy meeting minutes

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Kenya's president, IMF chief speak after tax hikes pulled

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Latin American stocks up 1.2%, currencies up 1%

By Johann M Cherian

July 4 (Reuters) - Brazil's real led gains among Latin

American currencies after President Luiz Inacio Lula da Silva

committed his government to fiscal stability, while markets also

reacted to the release of central bank policy meeting minutes in

Chile.

Brazil's real jumped 1.2% to 5.49 to the dollar after

Lula ordered his economic team to comply with the country's

fiscal framework and approved suggestions of spending cuts, the

country's finance minister said.

The currency jumped more than 2% on Wednesday, its biggest

one-day rise since January, in the run-up to the meeting between

the Brazilian leader and his economic team. The real recently

had a bout of losses that saw it depreciate to more than

two-year lows on concerns of fiscal sustainability in the

region's biggest economy.

"Superficially, you can see a small (improvement) after all

the damage he's done recently ... but there is a possibility

that he might change his mind at some point and that is going to

stay in the back of investors minds for a while," said Eduardo

Ordonez Bueso, an emerging markets debt portfolio manager at

BankInvest.

More broadly, the MSCI index that tracks Latin American

currencies strengthened 1% to more than a

one-week high against the dollar. Trading was expected to be

thin as U.S. markets were closed due to the Independence Day

holiday.

Markets are turning their focus to the release on Friday of

the U.S. government's closely-watched monthly employment report,

which could provide clues to the Federal Reserve's likely

monetary policy path and the outlook for the dollar.

Mexico's peso added 0.7%, with market participants

awaiting more announcements on the formation of President-elect

Claudia Sheinbaum's cabinet.

Traders also parsed Sheinbaum's latest criticism of the

Mexican judiciary. Concerns about judicial independence under

Sheinbaum's incoming government have pushed the currency to

notch its biggest quarterly drop since the COVID-19 pandemic.

Chile's peso inched up 0.3% as copper prices were

steady. The South American nation is the world's largest

producer of the metal.

Minutes from the Chilean central bank's policy meeting last

month showed it considered cutting the benchmark interest rate

by 50 basis points or keeping it unchanged. The central bank

opted for a 25-basis-point reduction to 5.75% at the meeting.

Peru's sol climbed 0.7% in thin trading. Economy

Minister Jose Arista said the copper exporter's economy likely

grew between 4.5% and 5% on a year-on-year basis in May, in what

would be the second consecutive month of growth.

Colombia's peso added 0.4%.

The MSCI index that tracks regional bourses

rose 1.2% to a one-month high, aided mostly by heavy-weight

Brazilian equities.

The main stock indexes in Mexico, Colombia

and Chile were largely flat to marginally higher.

Elsewhere, the yield on Kenya's five-year bond

slipped 13 basis points.

According to sources, Kenyan President William Ruto spoke

with International Monetary Fund chief Kristalina Georgieva

after he withdrew proposed tax hikes after deadly protests. The

hikes were central to the IMF's $3.6 billion lending programme

for the East African nation.

Key Latin American stock indexes and currencies:

Latin American market prices from

Reuters

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1104.28 1.09

MSCI LatAm 2236.13 1.25

Brazil Bovespa 126238.21 0.46

Mexico IPC 52836.27 0.08

Chile IPSA 6547.72 0.2

Argentina MerVal 1608339.35 0.301

Colombia COLCAP 1384.78 0.24

Currencies Latest Daily %

change

Brazil real 5.4908 1.40

Mexico peso 18.0586 0.56

Chile peso 936.6 0.62

Colombia peso 4086.5 0.44

Peru sol 3.791 -0.05

Argentina peso 913.5000 0.11

(interbank)

Argentina peso 1375 2.18

(parallel)