*

Latam FX set to gain 1%, stocks set to gain 2.6% this week

*

Mexican economy expected to stay sluggish, poll shows

*

Latam FX down 0.3%; stocks up 0.3%

(Updates to mid-session trading)

By Lisa Pauline Mattackal, Purvi Agarwal and Pranav Kashyap

Jan 17 (Reuters) - An index tracking Latin American

stocks slipped on Friday, as traders were closely analyzing the

potential impact of U.S. tariffs under the incoming

administration of President-elect Donald Trump, who is set to be

inaugurated next week.

MSCI's index tracking global emerging market currencies

pared gains and last trading flat. It earlier

rose after Trump said he had a good discussion with Chinese

leader Xi Jinping on a number of issues, including trade and

fentanyl.

In response to this news, most Latin American emerging

market currencies reversed earlier losses and gained strength

against the dollar.

Futures tracking China's Hang Seng Index jumped

1.2%.

The Mexican peso touched an over two-year low against

the dollar, before reversing course to rise 0.56%. The stock

index was up 0.44%.

The MSCI index tracking Latin American EM currencies

was down 0.3%. The index consisting of stocks

rose 0.3%. Both were set for their best weeks

since September and August respectively.

This week, Latin American markets managed to recover some of

their earlier declines. This rebound came after a U.S. inflation

report reignited discussions about the possibility of multiple

Federal Reserve rate cuts. This paused the rally in the dollar

and Treasury yields, which have been putting pressure on

emerging market assets.

Looking ahead to next week, attention will shift to the

inauguration of Trump as U.S. president.

Among Latin American economies, Mexico is expected to be the

most adversely affected by Trump's proposed tariffs. A Reuters

poll of analysts indicated that Mexico's economy is likely to

remain sluggish throughout the year.

"Moves in currency markets have for the most part remained

relatively muted ahead of Donald Trump's inauguration next week.

Next week may bring more volatility. Whether he delivers or

disappoints, markets are likely to react," Jonas Goltermann.

deputy chief markets economist at Capital Economics said.

In Brazil, President Luiz Inacio Lula da Silva promised to

introduce a minimum tax on all income earned by wealthy

individuals, in order to give tax relief to those earning under

5,000 reais ($824.72) per month, Finance Minister Fernando

Haddad said.

The real slipped 0.14%, while its Bovespa stock

index gained 0.8%.

In a positive development for Argentina, the country

reported its first trade surplus in over a decade in 2024, data

showed, marking a win for President Javier Milei and his

sweeping austerity push in his first full year in office.

Argentina's Merval index lost 4.1%, while its

peso was flat.

The Colombian peso pared early losses to trade flat.

Data showed November retail sales rose 10.4% on an annual basis,

while November industrial output slipped 0.8%.

The JP Morgan EMBI Global Index, which tracks emerging

market bonds, rose about 1% from the week prior.

Highlights:

**

Bolivia in talks with Argentina to restart gas supply amid

demand spike, executive says

** Argentina's economy rebounding 'quite strongly,' growth to

continue, IMF says

** Brazil's IGP-10 price index rises 0.53 pct in Jan

** European Union and Mexico re-ignite stalled upgrade to their

free trade deal ahead of Trump's inauguration

Key Latin American stock indexes and currencies:

Equities

Latest Daily %

change

MSCI Emerging 1070.12 0.32

Markets

MSCI LatAm 1915.81 0.31

Brazil Bovespa 122245.92 0.83

Mexico IPC 50166.54 0.44

Chile IPSA 6957.97 0

Argentina MerVal 2520387.87 -4.14

Colombia COLCAP 1386.68 -0.56

Currencies Latest Daily %

change

Brazil real 6.0584 -0.14

Mexico peso 20.7124 0.56

Chile peso 1005.78 0.61

Colombia peso 4336.15 0.03

Peru sol 3.738 0.51

Argentina peso 1,041.5 0.00

(interbank)

Argentina peso 1,215.0 1.62

(parallel)