*

Brazil's Bovespa hits 6-month low

*

Mexican elections in sight

*

Bank of Mexico raises forecast for 2024 inflation

*

Latam stocks down 1.3%, at over-six month low

(Updated at 3:25 p.m. ET/ 1925 GMT)

By Sruthi Shankar and Shashwat Chauhan

May 29 (Reuters) - Latin American assets were caught in

a wave of selling in global markets on Wednesday, spurred by

rising Treasury yields as investors pared back their bets on the

scale of interest rate cuts from the Federal Reserve this year.

A combination of stronger-than-expected U.S. economic data,

hawkish remarks from Fed officials and lukewarm demand in

Treasury auctions lifted the 10-year note yield to a

four-week high.

That piled pressure on high-yielding emerging market assets

that tend to benefit from lower U.S. rates.

The Brazilian real eased 0.8% even as data showed the

domestic economy created a net 240,033 formal jobs in April,

exceeding expectations and indicating stronger economic

momentum.

Brazilian President Luiz Inacio Lula da Silva said he hopes

the country's central bank will keep lowering interest rates to

help flood-hit Rio Grande do Sul state.

The Mexican peso, the Colombian peso and the

Chilean peso fell in the range of 0.8% and 1.6% against a

firmer dollar.

Mexico's benchmark IPC index was last up 0.3% after

briefly touching four-month lows. Caution prevailed ahead of

Sunday's presidential election, with the latest opinion polls

showing Mexican ruling party (MORENA) candidate Claudia

Sheinbaum extending her large lead over her main rival.

"We expect a limited reaction in local assets, which

have largely faded the elections," Barclays strategists wrote in

a note.

"Our view is that Morena will win, with a divided

Congress. We expect a limited move in USDMXN in this case, where

the MXN could outperform its peers by roughly 1% on the open as

lingering uncertainty is priced out."

Separately, the

Bank of Mexico upwardly revised its forecast for 2024

inflation to 4.0%, up from a previous forecast of 3.5%.

Meanwhile, the MSCI Latam stocks index slid

1.3% to an over six-month lows, while a gauge for currencies

dropped 1%.

Brazil's main Bovespa index fell 0.8% to a more than

six-month low, while bourses in Chile, Colombia

and Argentina dipped between 0.8% and 1%.

Brazilian airline Gol slipped 7% after its parent

company started talks with rival Azul to "explore

opportunities" following media reports about a potential merger.

Shares of Azul dipped 3.6%.

HIGHLIGHTS:

** Brazil's public sector gross debt rose to 76.0% of GDP in

April

** Mexico presidential race has clear favorite, but

pollsters say turnout is key

** Argentina market analysts see chance of another rate cut

Key Latin American stock indexes and currencies:

Latest Daily % change

MSCI Emerging Markets 1071.39 -1.53

MSCI LatAm 2368.84 -1.36

Brazil Bovespa 122809.38 -0.78

Mexico IPC 55321.90 0.25

Chile IPSA 6690.91 -1.24

Argentina MerVal 1557547.84 -0.858

Colombia COLCAP 1395.06 -0.96

Currencies Latest Daily % change

Brazil real 5.2030 -0.95

Mexico peso 16.9161 -0.81

Chile peso 910.4 -1.58

Colombia peso 3868 -0.85

Peru sol 3.7577 -0.56

Argentina peso 893.5000 0.06

(interbank)

Argentina peso 1210 0.00

(parallel)