EMERGING MARKETS-Latam stocks, currencies gain; Mexico peso rebounds after Banxico cut

By Sudeshna Ghoshal, Ragini Mathur and Avinash P

Nov 6 (Reuters) - Most Latin American stocks and currencies edged higher on Friday, and were poised to wrap up the week on a strong note as investors weighed the US midterm election results, a strong US jobs report and regional central bank policy signals.

MSCI's Latin American currency index .MILA00000CUS was muted, but was set for a second consecutive weekly loss. The regional equities index .MILA00000PUS gained 0.6%, though it was marginally lower for the week and on track to extend its losing run to four straight weeks.

Investors also assessed US Democrats' sweeping victories in the midterm elections on Tuesday, which fueled hopes of a de-escalation in the war with Iran, helping push crude prices sharply lower. But concerns that the new Democratic-controlled Congress could subject AI infrastructure build out to greater scrutiny hit technology shares, while a broader risk-off mood weighed on other markets.

In the region, Mexico's peso rose 0.6%, recovering some losses triggered on Thursday after Banxico, as the country's central bank is also called, unexpectedly cut its benchmark rate by 25 basis points. The bank called the move a "one-time adjustment."

Analysts said the peso's turnaround post the rate cut reflected growing optimism that changes to the US-Mexico-Canada Agreement (USMCA) could face greater scrutiny after the U.S. midterm elections, easing concerns about Mexico's trade relationship with its largest export market.

"When it comes to the USMCA trade agreement, it has always been stipulated that any changes or amendments have to pass by Congress. The idea is now that the White House is going to be having tremendous opposition," said Juan Perez, director of trading at Monex.

"If that's not going to be the case, that's very good news for both of those countries and will translate into protection for the Mexican peso. That development absolutely overshadows the very idea of loose monetary policy."

The peso was on track for modest weekly gains, which would snap an eight-week losing streak driven by uncertainty over US trade talks and dovish minutes from the central bank's policy meeting in September.

Mexican shares .MXX were up 0.3%, rising for a third day and heading for a weekly advance.

Separately, stronger-than-expected US jobs report reinforced expectations of a Federal Reserve interest rate hike next month, with the dollar rising 0.8% against a basket of currencies.

MODEST REBOUND IN BRAZIL

Brazil's real was trading flat against the dollar. The central bank on Wednesday paused its easing cycle, holding rates steady amid a worsening inflation outlook following President Luiz Inacio Lula da Silva's reelection last month.

Brazil's top lenders have slashed their economic growth forecasts for next year, threatening reelected President Lula's pledge to honor his campaign spending promises while also returning the budget to surplus.

The Bovespa .BVSP gained 1.2% and was set for a modest weekly rise after a steep selloff last week.

In Argentina, a central bank survey on Thursday showed analysts lowering their 2026 growth forecasts while raising inflation expectations. Local markets were closed for a public holiday.

Chile's peso inched 0.2%, while the country's stock index .MMXIPSAGC climbed 0.7%. Consumer prices rose 0.5% in October from the prior month, accelerating from the 0.4% increase in September as fuel costs climbed, though the reading came in below forecasts.