* Mexico inflation eases for sixth straight month
* Brazil retail sales up in H1 but losing steam
* Dollar weakens as China deflation stokes stimulus hopes
* Latam FX up 0.5%, stocks up 0.4%
Aug 9 (Reuters) - Most Latin American currencies gained on Wednesday as hopes of more stimulus from China following weak economic data pressured the dollar, with the Mexican peso edging higher as traders assessed a reading showing easing domestic inflation.
The Mexican peso rose 0.4% against the dollar after data showed annual inflation rate in Latam's second largest economy slowed for the sixth consecutive month in July to 4.79%.
Analysts were divided on the implications of the inflation data on the Bank of Mexico's future policy stance, with the central bank expected to keep interest rates unchanged at 11.25% on Thursday.
Andres Abadia, Chief Latin America economist at Pantheon Macroeconomics said easing underlying inflationary pressures could allow the central bank to cut rates from Q4.
However, Jason Tuvey, deputy chief emerging markets economist at Capital Economics pointed to sticky services inflation, saying "rate cuts will be more gradual than most anticipate".
The policy decision will come at a time when Chile and Brazil have started decoupling from the U.S. Federal Reserve by cutting interest rates against a backdrop of slowing inflation.
The broader Latin American currencies index was up 0.5% at 1910 GMT, as the dollar lost steam after risk sentiment was bolstered by data showing China fell into deflation, which spurred bets of more stimulus from the world's second-largest economy.
The stimulus hopes propped up copper prices, helping the Chilean peso and the Peruvian sol, currencies of top metal exporters, climb 0.2% and 0.4% respectively.{MET/L]
Meanwhile, the Colombian peso, the currency of a top oil producer, advanced 1.6% on higher oil prices.
Also helping the peso, data released on Tuesday showed consumer prices growth in Colombia slowed in July year-on-year but was above market expectations, with Scotiabank analysts saying the start of the easing cycle in the country could be delayed if inflation fails to slow considerably.
The Brazilian real , however, edged 0.1% lower as investors assessed data showing the country's retail sales ended the first half of 2023 in positive territory year-on-year, but lost steam since January.
Elsewhere, Argentina's peso slipped to a fresh historic low of 600 pesos per U.S. dollar in the widely used parallel informal market, traders said on Wednesday, ahead of a primary vote on Sunday to pick presidential nominees for October's general election.
The Russian
rouble
recovered from more than a 16-month low past 98 to the dollar on Wednesday after the central bank intervened to try and halt the Russian currency's slide, effectively abandoning its budget rule by stopping planned foreign exchange purchases.
(Reporting by Amruta Khandekar and Shristi Achar A; editing by David Evans and Diane Craft)
