* Peru's central bank expected to cut rates * Argentina's market steadies amid political uncertainty * Turkey cuts interest rates by 250 bps * US headline CPI rises 0.4%, year-on-year up 2.9% * Latam stocks up 1.1%, FX up 0.3% * Mexican stocks at record-high By Pranav Kashyap and Twesha Dikshit Sept 11 (Reuters) - Latin American currencies inched up in caution on Thursday as investors digested hotter-than-expected U.S. inflation, while a Turkish rate cut barely moved the needle. A gauge tracking Latin American stocks jumped 1.1%, while a similar index for currencies <.MILA00000CUS> was 0.3% higher as markets digested hotter-than-expected U.S. inflation for August—the biggest annual rise in seven months—leaving investors to parse how much the Federal Reserve can ease amid mixed data. Even so, odds of a 25 bps cut next week stayed fully baked in, according to CME's FedWatch. Peru's S&P/BVL Index <.MXNUAMPESCPGPE> gained 0.18% with the central bank expected to cut rates following a sharp drop in consumer prices for August that came in at 1.1% for the Lima metropolitan area - Peru's key benchmark figure - and within the bank's target rate of 1% to 3%. Mexican stocks <.MXX> were up 1%, hitting a record higher and rising above the 61,000 point for the first time. Data showed that industrial output fell 1.2% in July from the previous month and were 2.7% lower year-to-year. The peso rose 0.3%. Fed-cut expectations and labor-market softness have dragged the dollar, boosting EM currencies, while political noise over Fed independence has sapped U.S. appeal. Most Latam bourses are ahead this year—Colombia is up 35% versus the S&P's 11%—as investors hunt yield and value. Brazil's real , up 14% year-to-date, remains a carry favorite with policy rates near a two-decade peak. Policymakers in Brazil are likely to stand pat at 15% next week, extending July's pause after 450 bps of hikes since last September. "Investors will start to position for some steepening of the yield curve in U.S. and the carry dynamics are part of the story," said Rachel Ziemba, founder of advisory firm Ziemba Insights. On the day, Brazil's currency edged up 0.4%. Fresh data showed retail sales dropped 0.3% as expected and inflation fell 0.11% in August. Argentine assets steadied after a sharp selloff in the peso , bonds, and stocks <.MERV> sparked by local election setbacks for President Javier Milei's party, reviving fears a resurgent Peronist opposition could stall his reforms if October's midterms do not yield a majority. Buenos Aires stocks were up 0.6% and the peso was 0.2% higher on the day. "Markets are in a wait and see mode with Argentina and the results so far have been a challenge to Milei's agenda," Ziemba added. Turkey's central bank slowed its easing cycle with a 250-basis-point rate cut to 40.5%, a slightly more than forecast, amid rising political risk and after higher-than-expected inflation. Stocks in Istanbul <.XU100> were down 0.5%, while the lira was flat. Key Latin American stock indexes and currencies: Equities Latest Daily % change MSCI Emerging Markets <.MSCIEF> 1310.9 0.26 MSCI LatAm <.MILA00000PUS> 2477.18 1.12 Brazil Bovespa <.BVSP> 143279.14 0.65 Mexico IPC <.MXX> 61118.38 1.04 Argentina Merval <.MERV> 1837300.76 0.661 Chile IPSA <.SPIPSA> 9038.02 0.72 Colombia COLCAP <.COLCAP> 1866.32 -0.37 Currencies Latest Daily % change Brazil real 5.3878 0.38 Mexico peso 18.539 0.28 Chile peso 953.43 0.96 Colombia peso 3911.33 0.31 Peru sol 3.4765 0.11 Argentina peso (interbank) 1422 0.18 Argentina peso (parallel) 1380 0.72 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Latam stocks vs S&P 500 https://tmsnrt.rs/4nrN58f ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Pranav Kashyap and Twesha Dikshit in Bangalore Editing by Marguerita Choy) ((mailto:pranav.kashyap@tr.com; +919886482111;)) Keywords: EMERGING MARKETS/LATAM
