China stimulus, weaker dollar lift Latin American stocks and currencies

Updated at 2:30pm ET/1930 GMT

By Shashwat Chauhan and Lisa Pauline Mattackal

Jan 24 (Reuters) – Most assets inresource-rich Latin American countries advanced on Wednesday, as commodity prices were boosted byfresh stimulus plans in China and U.S. dollar declines lifted the region’s currencies.

Prices of most base metals and iron ore futures jumped after top commodities consumer China’s central bank announced a deep cut to bank reserves, in a move that will inject about $140 billion of cash into the banking system and send a strong signal of support for a fragile economy and plunging stock markets.

Hopes of renewed demand in the world’s second largest economy lifted emerging assets broadly, with MSCI’s global EM stock index jumping 1.3% .MSCIEF.

MSCI’s index for Latin American currencies .MILA00000CUS gained 0.8%, set for its best day since January 5, also helped on as the U.S. dollar =USD continued to slide. FRX/

The Mexican peso MXN= gained 0.6% against the dollar after data showed headline inflation in the country persisted in its upward trend, comingin above forecasts.

“All of this gives Banxico a difficult decision to make when the board next meets on 8th February,” said Jason Tuvey, deputy chief emerging markets economist at Capital Economics.

“Officials have hinted that the start of an easing cycle is close … but with the headline (interest) rate having risen for the past two months and wage growth still running at very high rates, it’s not clear if officials will feel comfortable that price pressures have truly been tamed.”

Mining stocks across the region including Grupo México GMEXICOB.MX and Brazil’s Vale VALE3.SA rose 2.7% and 1.4% respectively.

Iron ore exporter Brazil’s real BRL= rose 0.5% against the dollar, briefly touching a near one-week high of 4.9070 and was last trading at 4.9319.

However, despite rising in morning trade, the Bovespa index .BVSP was last down 0.3%, pressured by a nearly 1% loss in shares of heavyweight oil company Petrobras PETR4.SA.

MSCI’s basket of Latin American stocks .MILA00000PUS advanced 0.6%, rising for the second consecutive session.

Rising oil prices helped crude exporter Colombia’s peso COP= rise 0.8%.O/R

Copper pricestouched three-week highs, lifting the currencyof exporterPeru PEN=PE 0.3%.

Chile’s peso, CLP= the currency of the world’s biggest copper producer was little changed on the day.MET/L

Meanwhile in Argentina, the country’s largest union is set to hold a 12-hour strike to protesttough economic austerity measures and reforms by new libertarian President Javier Milei.

Argentina’s Merval index rose 3.4% to 1.253 million points, on pace for its fifth record close in six trading sessions.

Chile‘s <.SPIPSA> jumped 1.6%,while Colombian shares .COLCAP were flat.

Mexico’s benchmark index fell 0.2%.

Key Latin American stock indexes and currencies at 1930 GMT

Reporting by Shashwat Chauhan and Lisa Mattackal in Bengaluru; editing by Jonathan Oatis and Nick Zieminski