(Updated at 1430 GMT)

*

Brazil's economic activity falls less than expected in

July

*

Peru CB cuts benchmark rate for second time in a row to

5.25%

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Latam stocks up 2.3%, currencies up 1.6%

*

Goldman Sachs raises 12-mth target for MSCI EM stocks

index

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Russia's central bank raises key interest rate by 100 bps

to 19%

By Johann M Cherian

Sept 13 (Reuters) - Most Latin American currencies

firmed against the dollar on Friday, as investors priced in the

possibility of a bigger interest rate cut by the U.S. Federal

Reserve, alongside a rate hike by the Brazilian central bank.

MSCI's index tracking regional currencies

rose 1.6% to scale a two-week high, and was on track for its

biggest daily jump in over a month, as the dollar slipped.

Markets focused on comments from a former U.S policymaker

who argued that a 50 basis point rate cut is still an option

next week. Worries about a global growth slowdown had weighed on

currencies of the commodity exporters in the region recently.

On expectations that the Fed's monetary easing cycle could

broaden out rate cuts by central banks in developing markets,

Goldman Sachs raised its 12-month target on the MSCI EM equities

index to 1175 - around 8.5% above current levels.

Brazil's real strengthened 1% after data showed

economic activity in the region's biggest economy slowed less

than expected in July, reinforcing expectations that its central

bank will err on the side of caution on monetary policy next

week.

Bank of America analysts expect Brazil's benchmark rate to

rise from 10.50% currently to a peak of 12% in January 2025.

Copper producer Chile's peso rose 0.9%, with prices

of the metal hovering near a two-week high.

Peru's sol slipped 0.1%, after its central bank

trimmed the benchmark interest rate as expected by 25 basis

points to 5.25%.

The sol has outperformed Latin American currencies and is

down 1.74% year-to-date.

"Peru's positive real policy rate and a current account

surplus on top of net FDI inflows should continue to support

(the sol's) regional outperformance," said Elias Haddad, senior

markets strategist at Brown Brothers Harriman.

Oil exporter Mexico's peso strengthened 1.2%, to

touch more than a two-week high, while Colombia's peso

advanced 0.6% and hit a one-week high, as prices of crude oil

rose.

Traders kept a close eye on political developments in Mexico

after lawmakers approved judicial reforms earlier in the week -

the run up to which saw the peso hit its lowest levels in nearly

two years.

On the equities front, the index tracking Latam bourses

jumped 2.3%. Heavyweight Brazil's Bovespa

rose over 1%, underpinned by oil giant Petrobras

.

Mexican stocks climbed 0.6% and Peru's benchmark

index added 0.2%, while those in Chile and

Colombia were little changed.

Elsewhere, Russia's rouble weakened 2%. The central

bank unexpectedly raised its benchmark interest rate by 100

basis points to 19%, saying that inflation remained stubbornly

high and a tightening was needed to reduce it.

Key Latin American stock indexes and currencies

MSCI Emerging Markets 1086.69 0.69

MSCI LatAm 2195.32 2.36

Brazil Bovespa 127252.79 1.02

Mexico IPC 53028.86 0.58

Chile IPSA 6487.39 -0.04

Argentina Merval 1438048.3 0.962

6

Colombia COLCAP 1340.63 -0.04

Currencies Latest Daily %

change

Brazil real 5.6342 0.99

Mexico peso 18.678 1.18

Chile peso 942.95 0.94

Colombia peso 4060.06 0.56

Peru sol 3.7192 -0.18

Argentina peso 931.5 3.1132581

(interbank) 86

Argentina peso (parallel) 1340 -4.477611

94