BRASILIA, Dec 13 (Reuters) - Latin American currencies strengthened on Wednesday, a day after U.S. President Donald Trump's Republicans suffered defeat in a special election in Alabama, imposing a possible hurdle to his policy agenda. Expectations that Trump's efforts to cut taxes and boost infrastructure investments could boost U.S. economic growth and speed up inflation have weighed on investor demand for emerging market assets in recent months. Quickening inflation could force the Federal Reserve to hike U.S. interest rates more quickly in the coming months, dampening the allure of higher-yielding assets. But a disappointing U.S. inflation reading put the U.S. dollar on the backfoot on Wednesday and trimmed expectations of U.S. policy tightening going forward. Currencies from Chile, Mexico and Brazil firmed between 0.2 percent and 1.2 percent, while stock markets jumped. The U.S. special election result and inflation figures also temporarily seized the spotlight away from the Federal Reserve, which is widely expected to raise interest rates later on Wednesday and could provide clues about the timing of future U.S. policy moves. Shares of Cosan SA Indústria e Comércio led gainers on Brazil's benchmark Bovespa stock index after it concluded the acquisition of a stake in natural gas distributor Cia de Gás de Sao Paulo from oil major Royal Dutch Shell PLC. Phone carrier Oi SA slumped after it reached a deal with two major creditor groups on a plan to recover the company from bankruptcy protection that would give bondholders up to 75 percent of the company's shares.
Key Latin American stock indexes and currencies at 1645 GMT:
Stock indexes Latest Daily YTD pct pct change
MSCI Emerging Markets 1,120.13 0.7 29 MSCI LatAm 2,754.25 1.33 16.13 Brazil Bovespa 74,277.26 0.63 23.33 Mexico S&P/BVM IPC 48,171.94 0.99 5.54 Chile IPSA 5,107.87 1.35 23.04 Chile IGPA 25,645.20 1.23 23.69 Argentina MerVal 27,456.47 0.42 62.29 Colombia IGBC 11,085.44 0.11 9.45 Venezuela IBC 1,265.84 0.24 -96.01 Currencies Latest Daily YTD pct pct change
Brazil real 3.3038 0.71 -1.65 Mexico peso 19.1390 0.19 8.39 Chile peso 646.35 1.15 3.77 Colombia peso 3,013.15 0.40 -0.39 Peru sol 3.232 0.03 5.63 Argentina peso (interbank) 17.3050 0.32 -8.26 Argentina peso (parallel) 17.89 0.34 -5.98
(Reporting by Bruno Federowski)