EMERGING MARKETS-Latam markets jump, Mexican peso soars as traders assess tariff threats

By Lisa Pauline Mattackal

Jan 6 (Reuters) - The Mexican peso led broad regional currency gains and most Latin American stock markets leapt on Monday as investors welcomed a report that U.S. tariffs might be less aggressive than Donald Trump had threatened, though the president-elect disputed the report.

Trump's aides are exploring tariff plans that would be applied to every country but only cover critical imports, the Washington Post reported on Monday. However, Trump denied the report in a post on Truth Social.

Still, the Mexican peso MXN= continued to build on gains made after the Washington Post's story, rising 1.3% against the dollar while the country's main stock index .MXX jumped 1.7%. Both were on track for their best day since November.

Other Latin American markets jumped as the U.S. dollar =USD slid after the report, with MSCI's gauge of regional currencies .MILA00000CUS up 1.1% at an over two-week high.

An index of Latin American stocks .MILA00000PUS rose 2.4%, on pace for its best day since August.

"Even though we've seen these comments from Trump that it's full steam ahead with the tariff plan, just that the fact that some of the trade team appears to be trying to tilt policy towards something that's maybe a little bit more selective is something markets will hang on to," said Shaun Osborne, chief FX strategist at Scotiabank.

Fears of Trump's statements that he would impose tariffs of 25% on Mexican and Canadian imports and a 60% tax on Chinese imports materializing had pressured emerging markets currencies, particularly the Mexican peso in the last year which notched its biggest yearly drop since 2008.

The dollar's run to two-year peaks over the past month, due to concerns about the potential inflationary impact of Trump's policies and expectations for fewer U.S. interest rate cuts, has also weighed heavily.

Scotiabank's Osborne said the dollar had done "about has much as it can do," and news of more moderate tariffs could " take some of the steam out of the dollar's appreciation trend."

Other EM currencies rose, with the South African rand ZAR= jumping over 1%. Futures for China's Hang Seng index HSIc1 pared some initial gains after Trump's comments, but were last up 1.2%.

Elsewhere, traders said Argentina's country risk index, which measures the yield spread on its bonds versus U.S. debt, fell under the 600-basis-point barrier for first time since 2018.

Argentina's stock index .MERV jumped 2.5% to a fresh record high. Stock indexes in Brazil .BVSP and Peru .SPIPSA rose 1.5% and 1%, respectively.

Brazil's real BRBY= rose 1.2% and the Chilean peso CLP= was up 0.3%.

HIGHLIGHTS

** Chile central bank mulled keeping rates unchanged in December, minutes show

** Mexico s/a consumer confidence at 47.1 in December

Key Latin American stock indexes and currencies at 1520 GMT:

(Reporting by Lisa Mattackal in Bengaluru; Editing by Angus MacSwan)

((LisaPauline.Mattackal@thomsonreuters.com;))