EMERGING MARKETS-Politics, trade talk boost Mexico, rattle Brazil

SAO PAULO, April 4 (Reuters) - Traders in Latin America's largest equities markets were focused on major regional political developments on Wednesday, with Mexico's benchmark IPC index jumping about 1 percent and Brazil's Bovespa falling by a similar amount. In Mexico, traders said they were encouraged by positive talk from officials about completing a renegotiation of the North American Free Trade Agreement (NAFTA) in the near future. On Wednesday, Larry Kudlow, U.S. President Donald Trump's top economic advisor, told reporters he was predicting positive NAFTA news relatively soon that markets were "going to love." Top Mexican industrial officials and a U.S. lawmaker directly involved in the talks also made sanguine statements on Wednesday and Tuesday. In a note, Mexican brokerage Metanalisis said that in addition to NAFTA optimism, the Mexican market was being supported by a Bank of America changing its perspective on the IPC from 'underweight' to 'neutral.' The index had climbed 1.15 percent in afternoon trade. That contrasted heavily with the performance of equities in Brazil, the region's largest economy, where the Bovespa index had fallen 0.75 percent by the afternoon. Traders said the fall reflected a cautious tone in the market, as the Supreme Court resumed hearing former president Luiz Inacio Lula da Silva's plea to remain out of prison while he appeals a corruption conviction. The leftist leader is Brazil's most popular national politician, despite the conviction and six separate pending corruption trials, and many market participants see the outcome of the corruption cases as a danger to the country's economic recovery. The Supreme Court is split on his request to be allowed to exhaust his appeals before beginning to serve a 12-year prison sentence for taking bribes, and a ruling is expected to hinge on just one of its 11 justices. While losses were well spread across various sectors, Brazilian stocks exposed to international steel markets were consistent losers, as the United States and China continue to go tit for tat in an escalating trade fight, rattling commodities markets. Vale SA, a major miner of key steelmaking ingredient iron ore, fell 1.8 percent, accounting for about 17 percent of the Bovespa's slide, while shares in steelmakers Gerdau SA and Companhia Siderurgica Nacional SA both slid over 2 percent.

Latin American stock indexes and currencies at 1806 GMT:

Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1154.44 -1.34 1.01 MSCI LatAm 3026.66 -0.54 7.6 Brazil Bovespa 83989.67 -0.75 9.93 Mexico IPC 47221.06 1.15 -4.32 Chile IPSA 5536.09 0.03 -0.51 Chile IGPA 27725.78 0.05 -0.91 Argentina MerVal 31345.13 0.01 4.26 Colombia IGBC 11699.78 0.32 2.89 Venezuela IBC 5406.92 2.65 328.05 Currencies daily % YTD % change change

Latest

Brazil real 3.3345 0.09 -0.64 Mexico peso 18.1855 0.18 8.32 Chile peso 603 -0.12 1.93 Colombia peso 2786.7 -0.32 7.01 Peru sol 3.226 -0.09 0.34 Argentina peso 20.1775 0.01 -7.82

(interbank)

Argentina peso 20.57 1.22 -6.51

(parallel)

(Reporting by Gram Slattery; editing by Grant McCool)