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EMERGING MARKETS-Brazil and Argentine currencies rise in catch-up rally

Susan Mathew

(Updates prices) June 21 (Reuters) - While worries over tensions between U.S. and Iran kept some Latin American assets pressured on Friday, Brazil's stocks scaled a record high and its currency firmed in a catch-up rally, while Argentina's peso hit a two-month high. Sentiment globally took a hit after U.S. President Donald Trump called off a military attack on Iran at the last minute. The attack was meant to be in retaliation to the downing of an unmanned U.S. drone on Thursday. Stocks in Mexico, Chile and Colombia slipped between 0.1% and 0.6%. Among currencies, Mexico's peso slipped 0.5%, falling for the first time in four days, while Chile's currency was flat against a weaker dollar. The Mexican peso is set to log a rise of 0.3% over the week. Colombia's peso slipped 0.4% after three days of gains. Colombia's central bank on Friday kept the benchmark rate unchanged at 4.25%, as expected, in a bid to boost the economy ahead of what it said would be a temporary rise in inflation.

HOLIDAY CATCH-UP Returning from a holiday on Thursday, Brazil stocks soared 1.71% to an all-time high and the real touched a three month peak, up 0.5%, as they caught up with the Fed-fueled rally that had boosted broader markets a day earlier. However, shares of airline Gol Linhas Aereas and its loyalty program Smiles Fidelidade dipped more than 2% each. Smiles on Friday said Gol would adjust standard ticket and air miles pricing. Earlier this week, Gol had failed to reach a deal to buyout Smiles. The real was set to post a weekly gain of about 2%, while the Bovespa was set for a 4% gain over the week. Also returning from a holiday, in Argentina the peso rose 1.3% and the Merval stock index climbed 1.4%. Argentina's Treasury said on Friday that the country posted its biggest monthly primary fiscal surplus in eight years in May, from a deficit of 7.8 billion pesos a year ago.

In the coming week, investors will be keenly watching for the outcome of a meeting between the presidents of the United States and China to discuss trade on the sidelines of the G20 summit in Japan. "Our base case is that the G20 meeting between Presidents Xi and Trump will bring a constructive result, opening the door to a resumption of formal trade negotiations. However, we believe much optimism is already priced in," analysts at TD Securities said in a note.

Key Latin American stock indexes and currencies at 1948 GMT:

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1,054.44 0.06MSCI LatAm 2,875.88 1.29Brazil Bovespa 102,019.95 1.71Mexico IPC 43,424.48 -0.51Chile IPSA 5,056.40 -0.09Argentina MerVal 40,418.82 1.4Colombia IGBC 12,556.92 -0.56Currencies Latest Daily %

change

Brazil real 3.8167 0.86Mexico peso 19.1120 -0.61Chile peso 683.7 -0.04Colombia peso 3,197.43 -0.29Peru sol 3.3 0.30Argentina peso 42.7900 1.40

(interbank)

(Reporting by Susan Mathew in Bengaluru; Editing by Rosalba O'Brien)