• Currencies rise 1.2%, stocks climb 2.4%
• Politics in Brazil and Chile in the spotlight
• Argentina's dollar bonds edge higher
• Turkey cenbank cuts rates 150 pts to 38% on 'improving' signals
• Peru's rate decision at 18:00 ET

Dec 11 (Reuters) - Latin American assets climbed on Thursday, with regional currencies on track for their strongest session in eight months as the dollar weakened following an interest rate cut by the U.S. Federal Reserve.

Higher-yielding currencies in the emerging markets often benefit when the Fed cuts rates, as investors seek alternative destinations to park capital.

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The MSCI index for Latin American currencies (.MILA00000CUS) , opens new tab rose 1.24%, its strongest level since April 11, while the stocks gauge (.MILA00000PUS) , opens new tab jumped 2.4% - its best performance since August 22.

Brazil's real led the gains after its central bank left interest rates at a near two-decade high on Wednesday and stuck to its hawkish tone. It was last up 1.2% against the dollar.

The Chilean peso also firmed 1%, extending its strong run in the week leading up to the presidential run-off on Sunday, where far-right candidate Jose Antonio Kast is expected to win.

Peruvian equities (.MXNUAMPESCPGPE) , opens new tab jumped 1.6% to an all-time high, while the currency sol was largely unchanged as the country braced for a rate decision, likely to result in a "hold" verdict.

POLITICS, DATA TEMPER RISK IN BRAZIL

Brazil's Bovespa index (.BVSP) , opens new tab rose 0.4% having traded in tight ranges this week after Senator Flavio Bolsonaro, the eldest son of former President Jair Bolsonaro, confirmed his intention to run for president next year, dashing hopes for a more market-friendly contender such as Sao Paulo Governor Tarcisio de Freitas.

"Political volatility is a reason not to have as large a trade in Brazil as you might normally want, but the macroeconomic story is still very favorable," said David Hauner, head of global emerging markets fixed income strategy at BofA Global Research.

"Brazil is the one big emerging market that has a fiscal issue. And a favorable election scenario is one where you get an administration that is going to be focusing on some fiscal consolidation."

Data on Thursday showed retail sales volumes unexpectedly rose in October, despite signs of a slowdown in Latin America's largest economy amid high interest rates.

Separately, Mexican equities (.MXX) , opens new tab climbed 2.5% to an all-time high. The Senate on Wednesday approved tariff hikes of up to 50% on imports from China and several other Asian countries, aiming to bolster local industry despite opposition from business groups.

Argentina's dollar-denominated bonds were largely stable, a day after the government raised $1 billion through a bond sale as it prepares for an eventual return to international capital markets.

The main stock index (.MERV) , opens new tab fell 1.1% after data showed the monthly inflation rate edged up more than expected in November. The peso stayed largely steady.

Meanwhile, an Inter-American Development Bank report said Latin America and the Caribbean could lift per-capita output by 11% and cut inequality by 6% by making markets more competitive. The report cited weak competition as a central reason for decades of inconsistent productivity.

Elsewhere, Turkey's central bank lowered its policy rate by 150 basis points to 38%, cutting at the higher end of expectations, amid signals that disinflation is back on track after summer price pressure.

The main BIST 100 share index (.XU100) , opens new tab rose 0.4%, while the local currency lira was little changed.

Key Latin American stock indexes and currencies:

https://www.reuters.com/world/americas/latam-currencies-rally-fed-cut-brazils-real-leads-gains-2025-12-11/