(Updates prices) By Susan Mathew June 20 (Reuters) - Latin American stocks and currencies rose on Thursday as the dollar fell after the U.S. Federal Reserve signaled it was read to cut interest rates as soon as July, while rallying oil prices also helped to lift Colombia's peso. Mexico's peso hit a seven-week high before trading flat against the dollar, which posted its biggest two-day drop in a year after the Fed's policy statement on Wednesday. The Fed joined global peers such as the European Central Bank and the Reserve Bank of Australia this week in indicating that more policy stimulus is needed to maintain economic growth. European Central Bank also struck a dovish tone. Markets in Brazil and Argentina were closed for a local holiday. Net crude exporter Colombia's peso rose 1.5% as oil prices rallied 5% after Iran shot down a U.S. military drone, raising fears of a military confrontation between Tehran and Washington. "If we are right that both Fed and ECB will deliver rate cuts and we will get a trade deal in the second half of 2019, it is very good news for emerging markets," wrote Vladimir Miklashevsky, a senior economist at Danske Bank in a note. Mexico on Wednesday became the first country to ratify the United States-Mexico-Canada Agreement agreed late last year to replace the North American Free Trade Agreement. U.S. and China negotiators will also renew talks to end a bruising trade war. "A proper bout of EM FX appreciation will also require an improvement in EM growth, which is hard to see without some sustained reduction in global trade tensions," analysts at Goldman Sachs said in a note. Brazil's central bank kept its key rate unchanged as expected late on Wednesday and held back from signaling looser policy because of doubts over economic reforms. Higher copper prices helped both Chile's peso, which rose 1% on Thursday and looked set to extend gains to a third session, and stocks. Copper is Chile's main export. Stocks in Mexico rose 0.5%, while those in Colombia touched their highest since early last month, in line with world stocks. The director of Latin American sovereign ratings for Fitch on Wednesday said the credibility of Colombia's fiscal targets are deteriorating as the economy looks set to grow less than the government had predicted. Key Latin American stock indexes and currencies at 1943 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1055.16 1.63 MSCI LatAm 2838.54 1.24 Mexico IPC 43608.37 0.54 Chile IPSA 5049.20 0.31 Colombia IGBC 12612.55 0.61 Currencies Latest Daily % change Mexico peso 19.0055 0.06 Chile peso 683.4 1.29 Colombia peso 3188.62 1.56 Peru sol 3.31 0.57 (Reporting by Susan Mathew in Bengaluru; Editing by Susan Thomas)