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Chile's consumer prices up 0.3% in August

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EM stocks see inflows in week to Wednesday - BofA

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Latam stocks index down 1.5%, FX adds 0.1%

(Updated at 1950 GMT)

By Shashwat Chauhan and Lisa Pauline Mattackal

Sept 6 (Reuters) - Latin American currencies and stocks

fell broadly on Friday, as the latest U.S. jobs report prompted

investors to dial back expectations for a larger-than-usual

interest rate cut by the Federal Reserve this month.

The jobs report, the week's big-ticket event, showed

employment increased less than expected in August, but a drop in

the jobless rate to 4.2% suggested an orderly labor market

slowdown continued.

The dollar strengthened between 0.3% and 0.7% against the

Mexican peso, Brazilian real and Colombian peso

.

Stock indexes across Latin America fell, with benchmark

bourses in Brazil, Mexico, Colombia,

and Argentina losing between 0.9 and 2.7% on the day.

Traders cut back bets on a 50 basis point cut after the

data, currently seeing a 69% chance of the Fed opting for a

25-basis-point cut when it meets later this month, according to

the CME FedWatch Tool.

"The U.S. labor market is clearly cooler, but most

indicators still show an economy operating at trend or higher;

it makes sense for the Fed to start removing policy restraint,

but we see little need to panic," said Lars Mouland, chief

credit and rates strategist at Nordea Markets.

Chile's peso and Peru's sol both dipped 0.2%

as prices of top export copper slid on global demand worries.

Consumer prices in Chile rose 0.3%, slightly more than

expected, in August, data showed.

Emerging markets have struggled this week as continued

concerns about slowing growth in the U.S. and China, the world's

two largest economies, have compounded pressure on risk assets.

All Latin American stock indexes were set for weekly

declines, with Chilean stocks notching their worst

week since April 2023 with a 3.2% loss.

A gauge tracking the region's biggest stocks

slipped 1.5%, set for its third straight weekly loss, while

MSCI's index of global emerging market stocks lost

2.5% for the week, its worst week since mid-July.

The impact of "higher-for-longer" U.S. rates as been

particularly tricky for many Latin American central banks, which

have had to grapple with depreciating currencies and consistent

inflationary pressures amid signs of slowing growth.

"Central banks are still very unsure where the right level

of interest rates are for the post-pandemic economy, but with

the recent episode of much too high inflation still fresh in

mind, they will approach that level cautiously," Nordea Markets'

Mouland said.

Still, emerging market equities saw inflows for the 14th

straight week in the week to Wednesday, while debt saw outflows

for the sixth straight week, according to a report by Bank of

America.

Mexico's currency was set for its third straight weekly

loss, briefly weakening past 20 per dollar, after the lower

house of Congress approved an overhaul of the country's

judiciary.

MSCI's index for Latin American currencies

edged up 0.1% on the day, heading for a mild weekly gain of

about 0.2%.

HIGHLIGHTS

** Colombia reaches deal with truckers to suspend road

blockades

** Brazil's Eneva advances with purchase of power assets,

share issue

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1072.88 -0.3

MSCI LatAm 2191.48 -1.51

Brazil Bovespa 134677.56 -1.34

Mexico IPC 51069.83 -1.15

Chile IPSA 6246.34 -1.81

Argentina Merval 1717299.9 -2.728

3

Colombia COLCAP 1329.16 -0.93

Currencies Latest Daily %

change

Brazil real 5.5891 -0.27

Mexico peso 19.992 -0.66

Chile peso 943.99 -0.18

Colombia peso 4172.89 -0.41

Peru sol 3.7841 -0.23

Argentina peso (interbank) 956 -0.209205

021

Argentina peso (parallel) 1240 2.0161290

32