EMERGING MARKETS-Argentine assets steady on US support, US shutdown drags LatAm markets

* LatAm FX down 0.4%, stocks off 0.7% * Argentine markets steady after Bessent support comments * Consumer prices in Sao Paulo climbed in September * Peruvian stocks hit an intraday record high (Updates with afternoon prices) By Nikhil Sharma and Purvi Agarwal Oct 2 (Reuters) – Latin American stocks and currencies fell on Thursday as concerns about the U.S. government shutdown weighed on the markets, while Argentine assets steadied after the U.S. reaffirmed financial support for the economy. MSCI's index for Latin American currencies slipped 0.4% and was on track to snap its four-day streak of gains, while the dollar held steady despite pressures from a partial government closure. Speculation was rife about the duration of the shutdown and its effect on economic data at a time when markets are focused on labor data and the Federal Reserve's future policy actions. The shutdown is likely to postpone the September jobs report, leaving investors to rely on Wednesday's ADP National Employment Report, which showed weakness in private payrolls and boosted bets on a 25-basis-point cut later this month. The spotlight remained on Argentina, after U.S. Treasury Secretary Scott Bessent confirmed plans to provide a credit swap line, signaling Washington's intent to maintain strategic interests in the country. The local peso stabilized after three straight declines that reflected growing skepticism over U.S. support for President Javier Milei and a potential $20 billion swap line for Argentina's central bank. "U.S. support has become a de facto backstop for Argentine assets, but the lack of transparency and delays are adding volatility to the market," said a group of Citigroup analysts led by Donato Guarino. The country's assets have swung in both directions ahead of the upcoming mid-term legislative elections, where Milei's party seeks to gain seats to strengthen its minority position following a setback in last month's provincial elections. "The October 26 elections will be the inflection point: either Argentina consolidates its stabilization program, or it risks slipping back into volatility," said Citigroup analysts. The IMF said Argentina will need government commitment to a fiscal anchor and a consistent monetary and foreign exchange policy to strengthen confidence and reduce inflation. A Reuters poll showed on Wednesday that the currency is likely to weaken following the October 26 vote, but without suffering another big devaluation. Argentina's international dollar bonds also steadied, while the local stock index gained 1.3% after two sessions of losses. Milei, who is expected to meet U.S. President Donald Trump on October 14, said on Wednesday that proposed U.S. financial support could include purchases of Argentine debt in the secondary market and a profit-sharing arrangement. In Brazil, the real dipped 0.2% and the main stock index fell 1% . Consumer prices in Sao Paulo, Brazil's most populous city, climbed 0.65% in September, from an increase of 0.04% in August. A broader gauge for Latin American stocks extended losses to fall about 0.7%. Mexican stocks pared losses to gain 0.4% and the currency declined 0.3%, partly dragged down by falling oil prices. The country, being the second-largest oil exporter from Latin America, generates significant income from the commodity. On Wednesday, private sector analysts polled by Mexico's central bank upped the country's 2025 growth forecasts for the fourth consecutive time, while also raising inflation projections. The slip in oil prices weighed on Colombia, with stocks down 0.6%, while the local peso fell 0.2%. Chile's peso fell 0.2%, while the country's main stock index declines 0.4%. Peruvian stocks jumped 0.7% after briefly hitting an all-time high. Key Latin American stock indexes and currencies: Latin American market prices from Reuters MSCI Emerging Markets 1367.1 1.06 MSCI LatAm 2505.99 -0.71 Brazil Bovespa 144100.81 -0.97 Mexico IPC 62172.12 0.39 Chile IPSA 8900.35 -0.43 Argentina Merval 1787665.3 1.31 3 Colombia COLCAP 1851.26 -0.63 Brazil real 5.3385 -0.19 Mexico peso 18.4289 -0.32 Chile peso 961.29 -0.23 Colombia peso 3884.5 -0.18 Peru sol 3.4737 0.04 Argentina peso (interbank) 1424 -0.14 Argentina peso (parallel) 1430 0.69 (Reporting by Nikhil Sharma and Purvi Agarwal in Bengaluru; Editing by Alison Williams and Tasim Zahid)

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