*

Brazil inflation rises less than expected

*

Argentina's Milei swaps cabinet chief

(Updated at 3:10 p.m. ET/1910 GMT)

By Sruthi Shankar and Shashwat Chauhan

May 28 (Reuters) - Most Latin American currencies edged

higher against the dollar on Tuesday as investors looked ahead

to U.S. inflation data that could move the needle on

expectations of when the Federal Reserve will start cutting

interest rates.

With the dollar staying defensive, the Brazilian real

, the Colombian peso and the Chilean peso

rose between 0.2% and 0.7%.

The U.S. core personal consumption expenditures (PCE) index

- the Fed's preferred measure of inflation - will be released on

Friday, and expectations are for it to hold steady on a monthly

basis.

The real's gains came even as data showed consumer prices in

Brazil rose less than expected in the month to mid-May, with

12-month inflation remaining within the central bank's target

range.

"Inflation pressures in Brazil remain modest ... but core

pressures remain soft, and the sluggish cyclical recovery,

still-ample spare capacity and still-tight financial conditions

will help keep inflation under control over the second half of

the year," Andres Abadia, chief LatAm economist at Pantheon

Macroeconomics said.

"(However), upside risks to inflation remain, particularly

related to increased fiscal uncertainty, rising inflation

expectations and the BRL."

The central bank cut interest rates by 25 basis points to

10.5% earlier this month following six consecutive reductions

twice that size.

Mexico's peso bucked the trend to fall 0.9% in the

lead-up to presidential elections next month, while Peru's sol

was down 0.4%.

Most bourses in Latin America came under pressure, with

MSCI's index for stocks down 0.4%.

Brazil's Bovespa reversed initial gains and was now

down 0.7%, with gains propelled by state-owned oil company

Petrobras undercut by falling materials and health

care stocks.

Petrobras' new chief executive said in her first public

comments since taking the helm on Friday that a basin in

Brazil's Equatorial Margin, an environmentally sensitive

offshore prospect viewed by investors as the country's most

promising frontier for oil exploration, was a matter of

"national interest."

In Argentina, financial markets dipped after far-right

President Javier Milei, traveling on a U.S. tech tour, shook up

his cabinet, firing his chief of staff and bringing on board the

architect of his government's key economic reform package.

The financial markets, which have rallied hard since Milei

took office in December, saw bonds dip around 1% and the S&P

Merval stock index lose around 1.5%, as investors

digested the first major government overhaul.

HIGHLIGHTS:

** FACTBOX- As US moves towards faster stock settlement,

where are other countries?

** IMF says Brazil's flexibility on monetary easing pace is

prudent

** Colombia fiscal deficit was 1.2% of GDP in first quarter,

ministry says

Key Latin American stock indexes and currencies:

Latest Daily % change

MSCI Emerging Markets 1087.10 -0.3

MSCI LatAm 2399.49 -0.39

Brazil Bovespa 123667.99 -0.66

Mexico IPC 55260.50 -0.35

Chile IPSA 6805.93 -0.07

Argentina MerVal 1546175.23 -1.672

Colombia COLCAP 1409.47 -0.3

Currencies Latest Daily % change

Brazil real 5.1593 0.23

Mexico peso 16.7922 -0.88

Chile peso 897.4 0.42

Colombia peso 3840 0.75

Peru sol 3.7452 -0.30

Argentina peso 893.0000 0.11

(interbank)

Argentina peso 1190 1.26

(parallel)