* Improving global outlook spurs demand for Latam assets * Argentine stocks hit over 4-month high * MSCI index of Latam stocks hits highest level since late-July * Most regional currencies slightly stronger (Recasts with stocks, updates prices) By Ambar Warrick Dec 18 (Reuters) - Latin American stocks rose on Wednesday as Brazilian markets hit a record high, while Argentine equities surged after the country's central bank chief flagged potential interest rate cuts in the short-term. Brazil's stock index jumped about 1.3% to hit a record high, helped by financials and energy stocks. A massive overhaul of Brazil's pension system earlier in the year, coupled with record low interest rates and recovering domestic demand, has created a rosy picture for Latin America's largest economy going into the next year. Late on Tuesday, Brazil's Congress approved the federal government's budget for next year, based on projected economic growth of 2.32%. The MSCI's index of Latin American stocks touched its highest in nearly four months. Brazilian stocks are the heaviest members of the index. Argentine stocks rose to their highest in more than four months as the country's central bank chief said interest rates would "surely" go down in the near term, and that Argentina's debt would not be difficult to restructure. The country is set to begin talks with creditors over restructuring its huge debt overhang, in the near-term. Concerns over the country defaulting on its debt had caused a massive drop in the peso earlier in the year, and had sent inflation sky-rocketing. Mexican stocks jumped to their highest since late-April, with Banco Santander Mexico extending gains after JP Morgan upgraded the stock. Chilean stocks fell for a third straight day. Regional currencies firmed slightly, with Brazil's real strengthening slightly to the dollar. The Chilean peso rose for the sixth day in a row, recovering from a steep fall in November sparked by violent anti-government protests. "Global markets have calmed down and sentiment is generally more friendly towards emerging market currencies, which is reflected particularly in Latam currencies," said Thu Lan Nguyen, FX strategist with Commerzbank. The Mexican peso trended slightly lower ahead of a widely expected interest rate cut on Thursday. A Reuters poll expects a 25 basis point-cut. Key Latin American stock indexes and currencies at 1910 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1108.61 0.54 MSCI LatAm 2894.64 1.1 Brazil Bovespa 114112.83 1.33 Mexico IPC 44920.61 1.17 Chile IPSA 4739.27 -1.57 Argentina MerVal 38522.87 4.345 Colombia COLCAP 1624.09 -0.06 Currencies Latest Daily % change Brazil real 4.0632 0.01 Mexico peso 18.9657 -0.21 Chile peso 751.95 0.51 Colombia peso 3324 0.48 Peru sol 3.338 0.03 Argentina peso 59.8150 0.00 (interbank) (Reporting by Sagarika Jaisinghani and Ambar Warrick in Bengaluru Editing by Alistair Bell)
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