Updates with afternoon trading levels

By Purvi Agarwal, Avinash P and Johann M Cherian

May 15 (Reuters) - Latin American assets slid on Friday and were on track for weekly losses as geopolitical tensions, inflation worries and political uncertainty in the region dampened risk appetite.

MSCI's index tracking LatAm stocks .MILA00000PUS was down 2.66%, its weakest level in over a month, while the currencies equivalent .MILA00000CUS was off 1.44%, on track for its biggest one-day decline in more than two months.

The stocks index was on track for a weekly decline of nearly 6%, while the currencies gauge was poised for a 2.2% loss.

Investors grew nervous as U.S. President Donald Trump left China following a two-day summit with no apparent help from Beijing to end the Iran war. Trump said he was losing patience with Iran to secure a peace deal to end the conflict, which is now in a fragile ceasefire.

Intensifying energy-induced inflation fears lifted the safe haven dollar =USD, while yields on global bonds soared on expectations that central banks, especially the U.S. Federal Reserve, would err on the side of caution regarding monetary policy.

In LatAm as well, yields on local currency bonds of Brazil BR10YT=RR, Mexico MX10YT=RR and Colombia CO5YT=RR were higher.

"EM can do well if the Federal Reserve is not able to cut due to strong global growth, but would be more vulnerable in a scenario of asymmetric growth favoring the US and/or a global stagflationary shock," said analysts at BofA Global Research.

"In the FX space, the BRL should continue to be supported by the commodity outlook and monetary policy, even if the election trigger remains several months ahead."

POLITICAL JITTERS IN BRAZIL AND PERU

Brazil's real BRL= led declines among regional peers, down 1.71%, and set for its weakest weekly performance since November 2022.

Senator Flavio Bolsonaro's chances in Brazil's October's presidential elections could be impacted by a report linking him to a disgraced banker, which have also jolted markets.

Brazil has been grappling with high interest rates and deteriorating public finances under President Luiz Inacio Lula da Silva. There are fears that Lula's re-election could drive investors away from Brazilian markets. Opinion polls currently put him and Flavio Bolsonaro at even odds.

Local stocks .BVSP fell 0.87%, to touch their lowest level in nearly two months as lender Itau Unibanco's ITUB4.SA 1.7% dip weighing on stocks.

Peru's sol PEN= and stocks .MXNUAMPESCPGPE were down 0.35% and 2.44% respectively, a day after its central bank held interest rates steady at 4.25%, as expected.

The country has been roiled with political uncertainty following allegations of voter fraud in the recently held elections.

Leftist presidential candidate Roberto Sanchez will face Keiko Fujimori in the June runoff after narrowly securing second place in April's first‑round vote, official results showed Friday, after all votes were tallied.

Markets have been cautious about Sanchez's presidential bid amid concerns of greater state control over resources and his ties to jailed former leftist President Pedro Castillo.

Colombia's Peso COP= and equities .COLCAP declined 0.52% and 0.82% respectively. The country is also headed to the polls later this month.

Data showed the economy expanded 2.2% in the first three months of 2026 compared with the same quarter last year, Colombia's official statistics office DANE said, in line with analysts' expectations.

Chile's peso CLP= weakened 1.31%, while its equities .SPIPSA shed 0.9%. Copper prices fell nearly 5% on Friday, hurting the world's largest red metal exporter.

Mexican stocks .MXX were hurt by a 4.5% drop in miner Grupo Mexico GMEXICOB.MX, while the peso MXN= depreciated 0.74%, in line with regional trends.

Meanwhile, Venezuela's bonds eased after a rally in the previous session after the country said it would restructure its bonds in one of the most complex exercises ever undertaken.

Key Latin American stock indexes and currencies:

Latin American market prices from Reuters
Equities	Latest	Daily % change
MSCI Emerging Markets .MSCIEF	1668.33	-2.82
MSCI LatAm .MILA00000PUS	3018.2	-2.66
Brazil Bovespa .BVSP	176807.67	-0.87
Mexico IPC .MXX	68188.11	-1.47
Chile IPSA .SPIPSA	10387.62	-0.9
Argentina Merval .MERV	2710895.32	-1.325
Colombia COLCAP .COLCAP	2104.49	-0.82
Currencies	Latest	Daily % change
Brazil real BRL=	5.0652	-1.71
Mexico peso MXN=	17.3437	-0.74
Chile peso CLP=	907.63	-1.31
Colombia peso COP=	3795.94	-0.52
Peru sol PEN=	3.4331	-0.35
Argentina peso (interbank) ARS=RASL	1394.5	-0.22
Argentina peso (parallel) ARSB=	1395	1.79