(Updates with midsession prices)

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Brazilian inflation slows in early June

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Dollar slips on concerns about Fed's independence

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Mexico rate decision expected

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MSCI Latam FX up 0.6%, stocks gain 1.5%

By Ragini Mathur, Purvi Agarwal, Pranav Kashyap

June 26 (Reuters) - Latin American currencies rose on Thursday, led by Brazil's real, as the U.S. dollar stumbled in the wake of President Donald Trump's latest remarks targeting the Federal Reserve chair.

Brazil's real vaulted 1.1%, eying its strongest session in over a month as the central bank doubled down on what it called its absolute commitment to a 3% inflation target - even as it signaled a pause on rate hikes.

Fresh data revealed inflation cooled more than anticipated in early June, yet remained stubbornly above target.

Adding to the real's momentum, Brazil's central government reported a narrower-than-expected primary deficit for May, buoyed by robust revenue and lower spending.

Investors, once wary of Brazil's fiscal discipline, have watched rates climb to a near 20-year peak of 15% following a series of hikes.

Now, BofA Global Research predicts Brazil could start cutting rates as soon as December, ahead of market consensus for a January move, citing limited fallout from U.S. trade policies.

Brazilian stocks climbed 1%.

Meanwhile, according to a Wall Street Journal report, Trump had toyed with the idea of announcing Fed Chair Jerome Powell's replacement by September or October.

"This has led to speculation U.S. interest-rate cuts may come sooner and go further than currently priced in to markets, and the dollar has taken a dip," said Fawad Razaqzada, market analyst at City Index.

Meanwhile, the dollar index skidded to multiyear lows, pressured by doubts over the Federal Reserve's independence and speculation of a dovish policy shift.

Across Latin America, Mexico's peso edged 0.3% higher while the country's stock index touched a near two-week high ahead of a central bank decision widely expected to deliver a half-point rate cut.

Argentina's peso also gained 0.6% as investors awaited a rate decision, while Peru's stock market flirted with record highs, last up 1.7%, while the sol advanced 0.6%.

Chile's peso gained 0.4%, tracking copper prices that were around three-month highs.

MSCI's index for Latin American currencies was up 0.6%, while the stocks gauge added 1.5%.

Global sentiment got a boost after Israel and Iran agreed to a ceasefire, halting a 12-day conflict that had rattled markets.

Still, caution lingers, as Iran's supreme leader warned of retaliation against any future U.S. attacks on the region.

Stocks in Israel closed 0.7% lower, and shares in Turkey were down 0.8%.

Israel's shekel edged up 0.3%, while Turkey's lira slipped 0.1%.

Key Latin American stock indexes and currencies around 1435 GMT:

MSCI Emerging Markets 1226.76 0.49

MSCI LatAm 2309.41 1.53

Brazil Bovespa 137083.37 0.97

Mexico IPC 57421.93 0.86

Argentina Merval 2040307.45 0.786

Chile IPSA 8195.14 0.67

Colombia COLCAP 1673.8 0.05

Currencies Latest Daily %

change

Brazil real 5.5003 1.13

Mexico peso 18.8713 0.26

Chile peso 931.35 0.43

Colombia peso 4040.5 0.28

Peru sol 3.548 0.64

Argentina peso (interbank) 1188 0.29

Argentina peso (parallel) 1190 1.68