(Updates prices)
By Susan Mathew
Aug 13 (Reuters) - Most Latin American markets rebounded on Tuesday as fears of further escalation in U.S.-China trade tensions eased slightly after the United States delayed tariffs on certain Chinese goods, while Argentina's peso continued its slide on rising fears of a return to populist policies.
Equities and other risk assets across the globe took relief from news that the U.S. administration will delay 10% tariffs on certain Chinese products, including laptops and cell phones, that had been scheduled to start next month.
The Brazilian real reversed early losses to trade up 0.4%, while Mexico's peso jumped 1% ahead of a central bank rate decision this week.
The bank is expected to hold its benchmark interest rate steady on Thursday, according to a Reuters poll, even as analysts increasingly brace for a possible rate cut to lift the country's misfiring economy.
Investors globally have been edge as a recent escalation in the U.S.-China trade dispute, including the weakening of the yuan past the 7-per-dollar mark, raised fears of recession.
Shares in Mexico lost 1% in what could be their third straight session of losses. Most other Latam stock markets besides Argentina rose, between 0.4% and 2%.
ARGENTINE UNCERTAINTY
Argentina's main stock index joined the rally, jumping 10% after having lost nearly 38% the day before when opposition candidate Alberto Fernandez and running mate Cristina Fernandez de Kirchner won a stunning edge over incumbent President Mauricio Macri in presidential primaries.
The showing pointed to significantly reduced chances of Macri being re-elected, and investors brace for a possible return to interventionist policies if the opposition were to win elections in October.
The peso fell over 4% to 55.9 to the dollar after a near 16% plunge on Monday. The currency had fallen to record low of 65 per dollar in the previous session, sending shockwaves across global financial markets.
"Key to watch will be how Fernandez tries to reduce market uncertainty and to quell investor fears with his next statements," wrote the EM team at TS Lombard led by Larry Brainard.
The central bank intervened on Monday to curb the peso's free-fall, but the more the central bank spends to stabilize the currency over the next two and a half months, the less it will have to pay off major debt maturities in 2020, TS Lombard analysts say.
"This could feed a vicious cycle that could end up punishing both the country and investors during the next government," they said, in a glum outlook for the beleaguered currency.
Key Latin American stock indexes and currencies at 2012 GMT:
Stock indexes Latest Daily %
change
MSCI Emerging Markets 971.51 -0.3
MSCI LatAm 2695.00 1.56
Brazil Bovespa 103299.47 1.36
Mexico IPC 39448.17 -1.01
Chile IPSA 4845.64 0.38
Argentina MerVal 30308.93 10.091
Colombia IGBC 12709.72 2.08
Currencies Latest Daily %
change
Brazil real 3.9668 0.42
Mexico peso 19.4117 1.00
Chile peso 705 1.28
Colombia peso 3409.8 0.43
Peru sol 3.384 -0.09
Argentina peso 55.3000 -3.25
(interbank)