* Argentina's Merval index rises on Bessent support * Regional equities slip, capping volatile week * Peru's new president faces widespread protests * UBS upgrades EM equities (Updates with afternoon prices) By Niket Nishant and Pranav Kashyap Oct 17 (Reuters) – Argentina's stock market rose 2.7% on Friday, riding a fresh wave of confidence from Washington, outshining its regional peers, while Peru's stocks dropped as the new president faced widespread protests. U.S. Treasury Secretary Scott Bessent reiterated support for Argentina, adding to a string of measures this week that have eased fears after President Donald Trump hinted that aid might hinge on President Javier Milei's party doing well in midterm elections. The Merval index was set to log a 3% gain for the week, its fourth consecutive weekly gain. "The long-term picture is one of increasing cooperation between the two countries. The number one focus is to move past the headlines of the midterm elections," said Thea Jamison, founder of investment management firm CHANGE Global. The Milei administration is seeking to restore investor confidence amid persistent inflation, fiscal strain, and a fragile political landscape. The local peso jumped between gains and losses for the week and fell as much as 4% on the day, hovering precariously close to record lows. Peruvian stocks tumbled 1.6% as nationwide protests erupted against newly sworn-in President Jose Jeri, prompting the government to prepare a state of emergency in Lima and unveil measures to curb rising insecurity. Brazil's benchmark index rose 0.8% and was on course to snap a three-week losing streak, helped by optimism around upcoming corporate earnings despite pressure from expiring stock options and weak cues from U.S. markets. Option expirations often trigger portfolio adjustments and volatility, as traders unwind positions and rebalance. U.S. and Brazilian officials held trade talks on Thursday and agreed to work to schedule a meeting between Trump and his counterpart Luiz Inacio Lula da Silva. The real rose 0.7% and was set to log its best week in over one month. Citi analysts cautioned that even if tariff risks ease, uncertainty related to the domestic political environment could weigh on sentiment. Still, some companies could benefit from the government's plans to offer financial guarantees to fund strategic mineral projects and tax incentives for their processing and industrialization. An index tracking Latin American equities and a parallel gauge of regional currencies each gained 0.3% and 0.2%, respectively, but remained on track to end the week up 2.7% and 1%. Colombia's stock market gained 0.5% and was on course for its second consecutive week of gains. The peso crawled to its highest level since April 2024 and was set for its best week since January this year against the dollar. Raising the country's key interest rate for the first time in over two years is "on the table" in the face of several risks that could speed up inflation, Colombian central bank board member Mauricio Villamizar said in an interview with Bloomberg News published on Friday. The remarks came days after Colombia's Senate gave the final approval to the government's 2026 budget, sending it to the president to sign. Mexican stocks retreated 1.3% after two sessions of gains. Elsewhere, pockets of global assets found support as easing tensions in the Middle East helped remove a long-standing drag on risk sentiment. Long-dated Israeli bonds gained. Brokerage UBS Global also upgraded emerging market equities to "attractive". Key Latin American stock indexes and currencies: Latin American market prices from Reuters MSCI Emerging Markets 1362.22 -1.21 MSCI LatAm 2486.83 0.31 Brazil Bovespa 143311 0.78 Mexico IPC 61727.06 -1.31 Argentina Merval 1982181.5 2.73 5 Chile IPSA 9129.98 0.2 Colombia COLCAP 1909.11 0.54 Brazil real 5.4048 0.74 Mexico peso 18.37 0.36 Chile peso 956.31 -0.05 Colombia peso 3832 0.17 Peru sol 3.378 0.22 Argentina peso (interbank) 1450 -2.76 Argentina peso (parallel) 1465 0.00 (Reporting by Niket Nishant, Johann M Cherian and Pranav Kashyap in Bengaluru; Editing by Kirsten Donovan and Shreya Biswas)
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