Updates prices

By Twesha Dikshit

March 18 (Reuters) - Latin American stocks dipped on Wednesday as escalating tensions in the Middle East sent oil prices surging and spurred a rotation out of risk assets.

The latest bout of angst was driven by the attack on Iran's huge Pars gas field, in the first reported strikes on Iranian energy infrastructure, which prompted warnings of a stern retaliation from Tehran.

The developments shattered the short-lived calm earlier this week and reminded investors that geopolitical risks remain a driving force even during a busy stretch of central bank meetings.

Now in its third week, the U.S.-Israel war against Iran has thrown the global energy markets into a tailspin. The vital Strait of Hormuz remains essentially shut, raising concerns over the impact on inflation and muddying the outlook for policy decisions.

Still, the impact has not been uniform across all EM regions, as oil-exporting nations, particularly in LatAm, fared much better than Asian and European economies, which are reliant on energy imports.

"We are operating in a new environment, where macroeconomic concerns are elevated. Things like tariff policy can have a big impact on certain emerging market countries and ditto with geopolitical conflicts," said George Schultze, founder of Schultze Asset Management.

"With the war in the Middle East, certain countries are much more impacted because they don't have the ability to produce their own energy."

The MSCI index of Latin American stocks .MILA00000PUS fell 1.1%, while a corresponding benchmark for currencies .MILA00000CUS was down 0.7% against a stronger dollar.

Meanwhile, the U.S. issued a general license authorizing certain deals involving Venezuela's state oil company PDVSA, a notice on the U.S. Treasury Department website showed.

Both Venezuelan sovereign and PDVSA bond prices jumped to their highest level since the country defaulted in 2016. Venezuela's 2031 issue USP17625AD98=TE rose 2.6 cents to 50.9 cents on the dollar, while PDVSA's 2024 bond USP7807HAT25=TE jumped to 35.4 cents.

MARKETS MIXED AS RISK-OFF WEIGHS ON METALS

Central bank data showed Chile's economy grew more slowly in 2025 than in the previous year, despite returning to growth in the fourth quarter.

The benchmark index .SPIPSA was flat, while the peso CLP= fell 1.1% as a sharp drop in copper weighed on the exporter.

Stocks in Mexico .MXX dipped 0.5%, while gold-exporting Peru's equities .MXNUAMPESCPGPE fell 3.1%, tracking the dip in precious metals. The Brazilian real BRL= and the Peruvian sol PEN= fell 0.7% each.

Equity index in Argentina .MERV was the outliers, gaining 0.6%. Colombian equities .COLCAP fell 0.3%.

Colombia imposed 35% tariffs on imports of 14 steel and metalworking products from countries with which it does not have free-trade agreements on threats of unfair competition.

Investors were also parsing commentary from U.S. Federal Reserve Chair Jerome Powell, after the central bank kept interest rates unchanged. A decision on rates was also due in Brazil.

Key Latin American stock indexes and currencies at 1935 GMT:

(Reporting by Twesha Dikshit and Niket Nishant in Bengaluru, Editing by Louise Heavens and Shilpi Majumdar)

((Twesha.Dikshit@thomsonreuters.com;))