EMERGING MARKETS-Latam stocks mixed, currencies firm as investors eye US-Iran developments, domestic data

By Utkarsh Hathi

Sept 21 (Reuters) - Latin American equities were mixed on Monday, while currencies were flat to higher against the dollar as investors weighed hopes of diplomatic progress in US-Iran conflict, and looked ahead to inflation data later this week from Brazil and Mexico, the region's largest economies.

The recovery in currencies comes after a difficult week for regional markets as a stronger dollar following the US Federal Reserve's rate hike, political uncertainty in Brazil ahead of next month's elections, and concerns over Colombia's public finances weighed on investor sentiment.

Investors were looking ahead to the UN General Assembly starting Tuesday in New York. US President Donald Trump said he was open to meeting Iranian President Masoud Pezeshkian on the sidelines of the meeting, rekindling hopes that US and Iran could return to the negotiating table.

Oil prices slipped 2.5% to their lowest in 11 days, as traders also eyed a partial recovery in shipments from Saudi Arabia. O/R

MSCI's index tracking the region's equities .MILA00000PUS rose 0.95%, while its currency equivalent .MILA00000CUS also gained 0.8%.

In Brazil, a BTG Pactual/Nexus poll showed on Monday that President Luiz Inacio Lula da Silva and right wing Senator Flavio Bolsonaro remain tied, with the leftist incumbent holding a narrow lead within the survey's margin of error.

The real edged 0.64% higher, while the Brazilian benchmark index .BVSP rose 0.61%.

Though the sentiment for the region's equities have improved in September, investor remain cautious about adding to their position ahead of the elections. A Latin America fund manager survey by Bank of America Global Research showed that while more than 70% of participants see the benchmark at 180,000 points or more than that, only one-third of participants said that they would be willing to add to equities at current levels.

"The next president will choose the direction of economic policy, but Congress and fiscal arithmetic will determine how far that agenda can travel," said BofA Global Research economists in a note.

Brazil's September mid-month inflation figures are expected later in the week. The central bank of Brazil delivered a 25 basis points rate cut last week, with private-sector economists polled weekly by the bank expecting additional quarter point rate cut at the end of 2026.

The Mexican peso was flat. The central bank of Mexico is widely expected hold rates unchanged on Thursday, a week after Brazil's central bank delivered a 25 basis points rate cut.

Equities in Mexico .MXX slipped 0.28%.

Elsewhere, the Czech government approved a 2027 budget draft on Monday to widen the deficit for a third straight year.

Key Latin American stock indexes and currencies at 14:48 GMT