Updates with late afternoon trading

By Ragini Mathur, Utkarsh Hathi and Purvi Agarwal

June 30 (Reuters) - Latin American currencies and stocks were mixed on Tuesday, as investors weighed local political developments and U.S. policy risks at the end of the month and quarter.

MSCI's regional currency index .MILA00000CUS edged 0.2% higher and remained on track for a sixth straight quarterly gain. For the month, however, it was set to decline after two consecutive monthly advances.

The equivalent stocks index .MILA00000PUS was down 0.2% on Tuesday, and was poised for a monthly and quarterly loss, snapping a five-quarter streak of gains.

Latin American markets, typically driven by commodity prices and domestic economic and political headlines, also came under pressure from a firmer U.S. dollar amid rising expectations of tighter monetary policy from the Federal Reserve.

The region has largely missed the AI-driven rally that has propelled some Asian markets to record highs. Still, analysts said Latin American assets had held up relatively well during the U.S.-Israeli war on Iran, which began in late February.

"LatAm is a supply hedge, not a Fed hedge. It does not hold up as well when tighter Fed pricing becomes the main macro driver. The positive terms-of-trade shock has faded, and LatAm assets are more exposed to tighter U.S. financial conditions than many other EMs," said Geoff Yu, analyst at BNY.

HSBC's EM sentiment survey showed that risk appetite deteriorated sharply in June, with a stronger dollar seen as the main risk. However, LatAm remained the only region with positive net sentiment across all asset classes.

In the region, equities in Peru .MXNUAMPESCPGPE and Chile .SPIPSA were set to log gains for both the month and the quarter. Colombian equities .COLCAP were on track for monthly gains.

Peru and Colombia benefited from a pivot to market-friendly governments in their presidential elections. Right-wing candidate Keiko Fujimori leads the final count in Peru's presidential runoff after the country's ONPE electoral authority finished tallying 100% of the vote on Monday after weeks of reviewing contested ballots.

Colombia's right-wing outsider Abelardo De La Espriella narrowly won the presidency, though the tight result is expected to constrain his agenda and force him to seek compromises in a divided Congress.

Peru's sol PEN= and Colombia's peso COP= were set for quarterly gains, with the latter eyeing its sharpest monthly rise since November 2020.

Colombia's central bank raised its benchmark interest rate to 12%, again upping rates in a cycle kicked off in January in a bid to curb inflationary pressures.

"Markets are taking profits after the election bounce, and today's expected 50 bp BdlR (Banco de la República) hike to 11.75% is unlikely to stop that," said Yu.

The Brazilian real BRL= inched 0.2% higher on Tuesday, while the Bovespa stock index .BVSP fell 0.5% on the day. Stocks were set for their fourth consecutive month of losses, their longest losing run since late 2024.

Gross debt in the region's largest economy rose by more than expected in May, rising to 81.1% of its gross domestic product, data showed on Tuesday, as the country's rising interest bill pushed borrowing higher.

U.S. President Donald Trump's administration is expected to formally declare on Wednesday that it will not extend the U.S.-Mexico-Canada Agreement on trade, starting a decade-long clock to wind down the 32-year-old North American free trade zone as the three countries haggle over proposed changes.

The Mexican peso MXN= was on track for its sixth straight quarter of gains, while the country's stock benchmark .MXX fell 0.8% on the day.

Key Latin American stock indexes and currencies:

Latin American market prices from Reuters
Equities	Latest	Daily % change
MSCI Emerging Markets .MSCIEF	1724.17	1.01
MSCI LatAm .MILA00000PUS	2952.26	-0.18
Brazil Bovespa .BVSP	172289.71	-0.53
Mexico IPC .MXX	67126.52	-0.76
Chile IPSA .SPIPSA	10835.61	0.68
Argentina Merval .MERV	3166877.55	-0.31
Colombia COLCAP .COLCAP	2277.04	-0.4
Currencies	Latest	Daily % change
Brazil real BRL=	5.1642	0.2
Mexico peso MXN=	17.4939	-0.18
Chile peso CLP=	921.01	0.05
Colombia peso COP=	3402.5	1.22
Peru sol PEN=	3.4153	-0.13
Argentina peso (interbank) ARS=RASL	1481	0
Argentina peso (parallel) ARSB=	1495	-0.34