Stocks in Brazil rose ahead of the Congress' return from an end-of-year break and discuss President Jair Bolsonaro's ambitious pro-market reforms.

Brazil's real retreated from three-month highs, in line with most emerging market currencies as investors were cautious after data showed factory activity across major  economies in Asia and Europe slowed, adding worries to earlier signals of a global slowdown.

The currency was, however, on track to post weekly gains as expectations from the government on pension reforms remained high.

Mexico's peso was on track to snap a nine-week streak of gains as a Fitch downgrade of debt-laden state oil firm Pemex left investors worried about the country's sovereign debt rating.

The Chilean peso was marginally lower dragged down by a drop in the price of copper, the country's main export.

Meanwhile, stocks in Sao Paulo's benchmark index rose 0.4 percent as market participants keenly watched political developments related to election for key posts in the Congress and discussion of highly anticipated pro-market reforms by Bolsonaro.

The Bovespa, one of the best performers across the globe this month, did not show strong signs of ending higher for the week, pulled down mainly by iron-ore miner Vale, which shed close to 25 percent as the week started.

The disaster-tainted miner experienced its worst week on record after a dam burst at one of its mines in Brazil that is expected to have taken the lives of an estimated 300 people.

Investors in the region also watched developments in Venezuela as global jostling further intensified between countries that want President Nicolas Maduro in power and those trying to force him to resign, as opposition leader Juan Guaido made overtures to his rival's allies Russia and China.

Fund managers on Friday told Reuters that JP Morgan has kept dollar-bonds of Venezuelan state-oil firm PDVSA in its emerging market bond indexes in a monthly rebalancing.

Trading volumes of those bonds had dived following US sanctions, prompting speculation that their low liquidity would result in their ejection from the widely followed indexes.