*

Brazil's Petrobras sinks after Q4 results

*

Real weakens on iron ore losses

*

Chile's peso outshines local peers

*

Investors sell EM equity, bond funds in week to March 6

*

Stocks down 1.4%, FX off 0.4%

(Updated at 3:15pm ET/2015 GMT)

By Shashwat Chauhan and Lisa Pauline Mattackal

March 8 (Reuters) - Brazil's markets lost ground on

Friday as weaker commodity prices weighed on the real and shares

of oil giant Petrobras slumped, despite broader strength in

emerging market assets on hopes of policy easing from the

Federal Reserve.

Brazil's state-run oil company Petrobras plunged

as much as 13% after the firm said it would only pay a routine

dividend of 14.2 billion reais ($2.9 billion) to shareholders,

frustrating investors and triggering a slew of analyst

downgrades.

Shares were last down about 10%, on pace for their worst day

since October 2022, and sending the benchmark Bovespa index

down 1%.

The decision "heightens the risk perception at Petrobras,

particularly on the government influence regarding major capital

allocation decisions," analysts at Bank of America wrote in a

note to clients while downgrading the stock to neutral.

Meanwhile, MSCI's index for Latin American currencies

dropped 0.4% as Brazil's real tumbled 1%

against the dollar to 4.9845, near the psychologically important

level of 5 per greenback as prices of top export iron ore fell.

Shares of miner Vale dropped 0.7%.

Brazil bucked broader gains in emerging markets after

closely watched U.S. job growth kept on the table an anticipated

Federal Reserve interest rate cut in June.

"An ostensibly strong labor report has some mixed messages

under the surface, and overall should keep current rate cut

expectations in line," said Adam Hetts, global head of

multi-asset at Janus Henderson.

Colombia's peso rose 0.4%, and Mexico's peso

jumped 0.4% to 16.80 per dollar, its highest level since

January.

MSCI's basket of global emerging market stocks jumped to its

highest level since August 2023, set to gain 1.2% for the week.

However, MSCI's gauge of Latin American stocks

fell 1.4%, set to decline for the week.

Chile's peso, which has struggled over the past few

weeks, leapt 2.3% in its best day in nearly four months after

official data showed consumer prices rose more than expected in

February.

Peru's sol gained 0.6% to 3.6763 per dollar, its

highest this year after its central bank held benchmark interest

rates at 6.25% on Thursday, defying expectations of a

25-basis-point rate cut.

Elsewhere Ukraine's sovereign dollar bonds rallied, with the

2030 maturity hitting its highest since June 2022.

Investors remained net sellers of emerging market debt funds

in the week to March 6, while EM equity funds saw $1.73 billion

worth of outflows over the same period.

HIGHLIGHTS

** Argentina inflation seen cooling as Milei austerity

tempers food prices

** Foreign direct investment in Colombia to rise up to 4%

this year

** IMF backs new Pakistan program, bonds rise

Key Latin American stock indexes and currencies at 2015 GMT:

Latest Daily %

change

MSCI Emerging Markets 1037.34 0.69

MSCI LatAm 2487.09 -1.42

Brazil Bovespa 127047.88 -1.01

Mexico IPC 55008.95 -0.07

Chile IPSA 6337.61 -0.31

Argentina MerVal 1002335.84 0.757

Colombia COLCAP 1298.86 -1.12

Currencies Latest Daily %

change

Brazil real 4.9846 -0.07

Mexico peso 16.8003 0.41

Chile peso 960.5 2.27

Colombia peso 3898.96 0.37

Peru sol 3.6763 0.61

Argentina peso 846.5000 0.00

(interbank)

Argentina peso 975 1.03

(parallel)

(Reporting by Shashwat Chauhan and Lisa Mattackal in Bengaluru;

editing by Jonathan Oatis, Nick Zieminski and Ros Russell)