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EMERGING MARKETS-Latam stocks, FX rally on U.S.-China trade reprieve

By Susan Mathew

(Updates prices) By Susan Mathew July 1 (Reuters) - Most Latin American currencies and stocks made a positive start to the second half of the year on Monday as the United States and China agreed to revive trade negotiations after a long lull, spurring investment into riskier assets. U.S. President Donald Trump offered concessions to China on Saturday when he met Chinese President Xi Jinping at the G20 summit, including holding off on new tariffs and easing restrictions on tech company Huawei. China agreed to make unspecified new purchases of U.S. farm products and restart negotiations. Most regional stocks rose in line with world stocks, and currencies firmed against a significantly stronger dollar, but ended off session highs. Mexican assets led gains, with the peso - a weather vane for trade sentiment, up 0.5%, while its IPC stock index climbed 0.7%. Investors seemed to brush-off data showing Mexican manufacturing slipped to a 20-month low in June. "The G20 result was mostly as expected, but the partial re-start of exports to Huawei was a positive surprise," Citigroup analysts wrote in a note. "This should benefit EMFX, but it is unlikely to be a game changer for the trade dynamics." Fears that a drawn-out trade dispute between the United States and China will hit global growth have spurred bouts of selling this year, with MSCI's index of emerging market stocks and currencies posting their worst monthly performance this year in May. But hopes that major central banks would tilt toward monetary policy easing to stir growth, and signs of progress in Sino-U.S. trade relations have helped them recover since. Brazil's real firmed 0.1% on Monday, while Sao Paulo-traded stocks rose 0.5%. Data on Monday showed manufacturing in Brazil avoided slipping into contraction in June. The Argentine peso was boosted by the central bank's move to set a new lower interest rate floor on its benchmark "Leliq" notes at 58% for July. The weekend also saw the European Union and South American bloc Mercosur, which Argentina and Brazil are part of, agreeing to a free trade treaty and committing to more open markets. If ratified, Credit Suisse analysts said the treaty would be a boost for Argentina's trade and investment prospects over the medium term. "With this deal, Argentina would be committed to improving some legal and regulatory standards. It could also make it more difficult for future governments to implement punitive trade measures," the Credit Suisse analysts said in a note. Chile's currency and stocks, however, slipped, hurt by the price of copper - Chile's main export, ending lower. Markets in Colombia were closed for a holiday. Latin American stock indexes and currencies at 1957 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1062.48 0.72 MSCI LatAm 2852.15 0.3 Brazil Bovespa 101458.14 0.49 Mexico IPC 43456.62 0.68 Chile IPSA 5064.69 -0.12 Argentina MerVal 41497.73 -0.71 Currencies Latest Daily % change Brazil real 3.8437 -0.12 Mexico peso 19.1230 0.49 Chile peso 680.02 -0.53 Peru sol 3.289 0.15 Argentina peso 42.3500 0.38 (interbank) (Reporting by Susan Mathew in Bengaluru; editing by Grant McCool)