Updates with afternoon trading levels

By Purvi Agarwal, Johann M Cherian and Avinash P

May 11 (Reuters) - Most Latin American currencies were steady and stocks were mixed on Monday after logging gains in the previous week, while investors exercised caution as peace talks in the Middle East hit an impasse and threat of a potential escalation loomed.

MSCI's index tracking LatAm currencies was flat as investors avoided large bets .MILA00000CUS, although it was hovering near a record high.

Brazil's real BRL=, Mexico's peso MXN= and Peru's sol PEN= were flat, while the pesos of Chile CLP= and Colombia COP= dipped 0.79% and 0.54%, respectively.

President Donald Trump said that a ceasefire with Iran was "on life support" after he rejected Tehran's response to a U.S. peace proposal, fuelling concerns of a resumption of hostilities and sending oil prices up over 3%.

A prolonged conflict is also threatening food security and is increasing credit risks in lower-income emerging markets, especially in Asia and Africa as costs for fertilizers soar.

In Latin America, Argentina wheat harvests are also threatened by higher fertilizer prices.

A sizeable chunk of fertilizer is exported through the Middle East and prices are expected to remain elevated even in the case of an immediate resumption of flows.

"The consequences could also have longer-reaching implications not for this harvest, but the next harvest, given the time frames and supply chain disruption that we're now talking about," said Benjamin J Young, managing director at S&P Global Ratings.

The spotlight later this week will shift to Trump's meeting with his Chinese counterpart Xi Jinping, with trade and Iran among the items on the agenda at the summit between the world's two largest economies.

In Latam, MSCI's equities benchmark .MILA00000PUS slipped 0.63%, dragged down by a 1.28% fall in Brazilian stocks .BVSP.

Offsetting some losses was Embraer's EMBJ3.SA 1% gain after the Brazilian planemaker was in talks with Colombia and Chile for potential orders of its C-390 military transport aircraft.

Argentine equities .MERV gained 1.85%, while Peruvian stocks .MXNUAMPESCPGPE added 1.1%.

Peru's government has authorized state-run oil firm Petroperu PETROBC1.LM to seek $2 billion in state-insured loans to ensure the continuity of its operations, according to an emergency decree.

Mexican stocks .MXX edged up 0.65%. Local central bank Governor Victoria Rodriguez said inflationary risks in the economy were contained at the moment and monetary policy should not react to transitory, limited supply shocks.

The country's central bank delivered a widely expected 25 basis-point cut last week, but indicated it was the last of its easing cycle started in 2024.

On the data front, Colombia's consumer prices rose 0.78% in April, taking cumulative 12-month price growth to 5.68%. Local stocks .COLCAP added 0.26%.

Brazil and Colombia head to elections this year, in October and May respectively, and analysts wait to see if a market-friendly government can consolidate, which could boost capital flows into local assets.

Elsewhere, Ukraine's bonds jumped between 1-2 cents on the dollar each on Monday. Russian President Vladimir Putin said over the weekend that he thinks the Russia-Ukraine war was coming to an end.

Key Latin American stock indexes and currencies:

Latin American market prices from Reuters
Equities	Latest	Daily % change
MSCI Emerging Markets .MSCIEF	1723.21	0.7
MSCI LatAm .MILA00000PUS	3184.92	-0.63
Brazil Bovespa .BVSP	181746.53	-1.28
Mexico IPC .MXX	70308.56	0.65
Chile IPSA .SPIPSA	10732.54	-0.25
Argentina Merval .MERV	2820349.89	1.85
Colombia COLCAP .COLCAP	2128.2	0.26
Currencies	Latest	Daily % change
Brazil real BRL=	4.8953	-0.04
Mexico peso MXN=	17.1922	-0.18
Chile peso CLP=	897.06	-0.54
Colombia peso COP=	3767.5	-0.79
Peru sol PEN=	3.4315	0.07
Argentina peso (interbank) ARS=RASL	1391	0.54
Argentina peso (parallel) ARSB=	1385	1.08