*

Brazil retail sales slip in June

*

Argentina inflation slows to 4% in July

*

Mexican c.banker warns of headline inflation 'contagion

effect

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Stocks up 1%, FX up 0.5%

(Updated at 1935 GMT/3:35 p.m. ET)

By Lisa Pauline Mattackal

Aug 14 (Reuters) - Latin American stocks and currencies

largely rose on Wednesday after a closely watched U.S. inflation

print came in broadly in line with expectations, keeping a

September start to policy easing by the Federal Reserve firmly

on the table.

The U.S. inflation report showed consumer prices rebounded

as expected in July, but the trend remained consistent with

subsiding inflation.

The signs of moderation in price pressures kept a September

start to U.S. policy easing alive, boosting emerging market

assets that typically benefit from lower borrowing costs in the

world's largest economy.

MSCI's index of stocks in Latin America

jumped 1%, while an index of currencies in the region

rose 0.5% against a subdued dollar. Both

the indexes were trading at their highest levels in nearly a

month.

"The data came in pretty much in line ... it gives the Fed

space to not have to make any panicked moves," said Ben Pace,

CIO of Cerity Partners.

The U.S. data was a welcome signal as worries about a

slowdown in the world's biggest economy have sent tremors

through emerging markets recently, even as investors look to the

start of the Fed's easing cycle.

However, traders trimmed bets on a larger-than-expected

interest-rate cut of 50 basis points, according to CME's

FedWatch.

Leading regional gains, Mexico's peso climbed 0.8%

and rose for the second day.

Bank of Mexico Deputy Governor

Jonathan Heath

said a recent rise in headline inflation could hit other

prices, adding that he viewed the central bank's recent interest

rate cut as premature.

Colombia's peso and Peru's sol rose 0.4%

and 0.1%, respectively, buoyed by higher

copper prices

.

Data showed Colombia's retail sales grew by 1.5%

year-on-year in June, while industrial output fell 4.8% over the

same period.

Meanwhile, Brazil's real fell 0.4% against the

dollar, after hitting a near one-month high intraday, and on

track to snap an eight-day winning streak. Data showed June

retail sales volumes slipped 1%, down for the first time in six

months.

Chinese industrial output and retail sales data are on deck

Thursday, and will be closely watched for signals on demand and

likely government stimulus in the world's second-largest

economy.

"We've decreased our weighting to emerging markets, there's

concern about a full weighting because China's so important to

whatever else happens in the emerging market space," Pace said.

Elsewhere in Latam, Argentina's monthly inflation stood at

4.0% in July, in line with a Reuters forecast and returning to

slowdown after speeding up in June.

Argentina's peso was largely flat on official

markets.

Meanwhile, Brazil's benchmark stocks index

outperformed regional peers, hovering at its highest level since

January.

Shares of Colombia's Ecopetrol lost 3% after

the state-owned oil firm reported a 17% fall in second-quarter

net profit.

Key Latin American stock indexes and currencies at 1935 GMT:

MSCI Emerging Markets 1076.59 0.52

MSCI LatAm 2297.05 0.97

Brazil Bovespa 133668.23 0.96

Mexico IPC 53573.55 -0.19

Chile IPSA 6365.55 -0.06

Argentina Merval 1600101.93 0.528

Colombia COLCAP 1349.02 0.38

Brazil real 5.473 -0.35

Mexico peso 18.8285 0.89

Chile peso 934.05 -0.38

Colombia peso 4016.45 0.37

Peru sol 3.725 0.09

Argentina peso (interbank) 940 0

Argentina peso (parallel) 1335 1.872659176