Updates to mid-session trading

By Purvi Agarwal and Johann M Cherian

Feb 6 (Reuters) - Mexico's peso cut advances and local equities rose on Thursday, after the domestic central bank lowered borrowing costs and hinted at further easing, while most other Latin American markets rose as concerns around a U.S.-led global trade war abated.

Mexico's peso MXN= pared some gains and was last up 0.4% after Banxico lowered its benchmark interest rate by 50 basis points to 9.50%, saying it could cut by a similar magnitude at future monetary policy meetings. Earlier in the week, data showed the domestic economy contracted in the last quarter.

An index tracking local equities .MXX added 1.6%, while yield on the 10-year bond MX10YT=RR dipped.

"It's no more than a movement of the policy towards a level that is a bit more supportive for the for the domestic economy, but at the same time not negative for the for the currency," said Padhraic Garvey, regional head of research, Americas at ING Financial Markets.

More broadly, MSCI's index tracking Latin American currencies .MILA00000CUS was up 0.7%, while the stocks measure .MILA00000PUS added 1.5%, trading at its highest level since early December.

On the tariff front, an official on Wednesday said that Mexico and the U.S. had agreed to economic dialogue in a week riddled with changing stances on tariffs and volatile moves in exposed economies.

However, China challenged the duties and U.S. President Donald Trump's cancellation of a duty-free exemption for low-value packages at the World Trade Organization.

Investors were also monitoring geopolitical conflicts after Trump announced that the U.S. would take over the Gaza Strip earlier in the week and as Israel ordered its army to prepare to allow the "voluntary departure" of Gaza Palestinians.

Israel's shekel ILS= and the local stock index .TA125 and dollar bonds in the country and its neighbors were little changed on Thursday.

In Europe, Russia's rouble RUB= rallied nearly 2%, while Ukraine's dollar bonds XS2895057334=TE added over 1 cent, on hopes of a conclusion to the conflict after the countries said they were in touch with the U.S. administration.

Back in South America, Brazi's real BRL= was up 0.5%, while local stocks .BVSP added 0.5%, with mining giant Vale VALE3.SA up 1.8%, tracking higher base metals prices.

Colombia's peso appreciated COL= 1%, while currencies of copper producer Chile CLP= firmed 0.9% as prices of the red metal rose.

Peruvian stocks .SPBLPGPT added 0.8%. The country's new Economy Minister Jose Salardi said that the Andean nation would sign commitments to spend over $3 billion over the next six months for infrastructure projects.

Key Latin American stock indexes and currencies at 1947:

(Reporting by Purvi Agarwal and Johann M Cherian in Bengaluru; Editing by Alistair Bell)

((Purvi.Agarwal@thomsonreuters.com;))