(Updated at 10:35 a.m. ET/ 1435 GMT)

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Brazil's real down despite central bank intervention

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Mexico's peso set for near 6% monthly drop

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Latam stocks flat, FX adds 0.2%

By Shashwat Chauhan

Aug 30 (Reuters) - Most Latin American currencies

slipped on Friday, as the dollar firmed after data supported the

likelihood of smaller interest rate cuts by the Federal Reserve,

while the Mexican peso was an outlier.

The dollar index perked up after data showed U.S.

consumer spending rose in July, suggesting the economy

strengthened early in the third quarter, lowering the chance of

50 basis point interest rate cut from the Fed next month.

The personal consumption expenditures (PCE) price index -

the Fed's preferred inflation gauge - rose 0.2% last month after

an unrevised 0.1% gain in June, the report also showed.

"This data keeps the Fed on path to a 25-basis point cut in

September followed by additional 25 basis point cuts in November

and December," said Greg Wilensky, head of U.S. fixed income at

Janus Henderson Investors.

"However, a faster cutting path is certainly possible,

including the chance of an initial 50 bps cut if next Friday's

employment data comes in materially weaker than expected."

Brazil's real slipped 0.3%, on track for its eight

straight monthly loss despite the country's central bank selling

the entire $1.5 billion offered in a spot auction announced on

Thursday.

Separately, central bank data showed Brazil's public sector

overall deficit exceeded 10% of gross domestic product (GDP) in

the 12 months through July, highlighting the fiscal challenges

facing Latin America's largest economy.

Chile's peso dipped 0.2%, while Colombia's peso

eased 1%.

Mexico's peso bucked the trend to rise 0.7%, though

it was set for a close to 6% monthly drop as worries about

domestic judicial reforms and expectation of dovish central bank

policy saw investors grow less positive on the currency.

Amongst equities, Brazil's Bovespa dipped 0.4%,

while the Mexican bourse slipped 0.3%.

MSCI's index for Latin American currencies

gained 0.2%, on track for marginal monthly losses, while a gauge

for stocks was flat, set for monthly advances.

Global equities saw sharp declines earlier this month as

investors dumped risk assets after a July jobs report in the

United States fanned worries of a recession in the world's

biggest economy. The worries have faded as data throughout the

month showed the resilience of U.S. consumers.

Adding to the volatility, a surprise rate-hike by the Bank

of Japan earlier this month caused the yen to rise and a

sharp unwinding of currency carry trades, where investors borrow

in low-yielding currencies such as the yen to invest in high

yielding assets like stocks.

High-yielding Latin American currencies saw sharp declines,

but most have recovered as markets gear up for the Fed's

expected interest rate cut next month, following Chair Jerome

Powell's dovish tilt last week.

Markets in Peru were shut for a public holiday.

HIGHLIGHTS

** Brazil's jobless rate drops to 6.8% in quarter through

July

** Chile's copper output, manufacturing production up in

July

** Kenya's inflation rises slightly to 4.4% yr/yr in August

** Maldives bonds at record low after Fitch downgrade amid

default concerns

Key Latin American stock indexes and currencies:

Equities Latest Daily % change

MSCI Emerging Markets 1099.9 0.45

MSCI LatAm 2236.96 0.00

Brazil Bovespa 135449.54 -0.44

Mexico IPC 52969.78 -0.32

Chile IPSA 6480.29 0.5

Argentina Merval 1737835.6 4.68

5

Colombia COLCAP 1337.51 0.16

Currencies Latest Daily % change

Brazil real 5.6438 -0.31

Mexico peso 19.699 0.69

Chile peso 914.02 -0.19

Colombia peso 4152.43 -0.99

Peru sol 3.7485 -0.22

Argentina peso (interbank) 950 0.052631579

Argentina peso (parallel) 1290 1.937984496