*

Mexican peso weakens past 17 per dollar

*

Brazil's real at lowest since March 2023

*

IMF sees smaller economic slowdown in Latam, Caribbean

region

this year

*

Latam FX down 1.6%, stocks fall 2.1%

(Updated at 3:30pm ET/1930 GMT)

By Bansari Mayur Kamdar and Lisa Pauline Mattackal

April 16 (Reuters) - Latin American currencies and

stocks slumped on Tuesday as the dollar soared on rising

geopolitical tensions and fading hopes of a rate cut by the U.S.

Federal Reserve.

Mexico's peso led Latin American currencies lower

with a fall of 2.0%, briefly crossing the 17 to the dollar mark

and trading at a nearly two-month low.

Juan Perez, director of trading at Monex, said the peso's

fall was partly the result of the dollar's jump to ultimate

safe-haven asset with the conflict in the Middle East reaching

an "uncomfortable point of escalation for all global markets".

"A world mostly blurred in its long-term outlooks is now

being overwhelmed with negativity and pessimism as tensions in

Russia, Ukraine, and now the Middle East seem to indicate they

are long-term headwinds to cope with," Perez said.

Traders also continued to trim expectations for more than

one Federal Reserve interest rate cut this year after comments

from Fed Chair Jerome Powell.

Emerging markets have been pressured since the start of the

year as strong U.S. economic data prompted investors to reprice

expectations that borrowing costs in the world's biggest economy

would fall significantly in 2024.

"I think Powell has changed his tune a little bit today ...

the Fed (cutting rates) narrative is still intact, but it

doesn't look as compelling as it did at the beginning of the

year," said Geoffrey Dennis, independent emerging markets

analyst.

However, Dennis said there is scope for emerging markets to

regain ground as the Fed's policy path becomes more clear.

The strength of the greenback pushed the MSCI index for

Latin American currencies down 1.6%, heading for

its biggest daily fall since February 2023. The broader emerging

market currencies index dipped 0.4% to its

lowest level since December.

Latin American stocks were 2.1% lower,

trading at the lowest level since November.

The Brazilian real fell 1.5% to 5.2648, its lowest in

over one year.

The Bovespa index fell 0.5%, with Vale

down 1.2% after a local court again suspended the operating

license for the miner's Brazilian Sossego copper mine.

The International Monetary Fund in its latest World Economic

Outlook upgraded its 2024 view for economic output growth in

Latin America and the Caribbean to 2% from January's estimate of

1.9%, though it still expects a slowdown.

Meanwhile, Sri Lanka rejected international bondholders'

proposal to restructure more than $12 billion in debt, putting

at risk critical IMF support and delaying efforts to resolve a

two-year-long debt crisis.

HIGHLIGHTS

** Ukraine bondholders form ad hoc committee for $20

bln talks

** Brazil framework is much bigger than changes in fiscal

target, says ministry

** ANALYSIS-China's cycle of dollar hoarding and weakening

yuan gets vicious

Key Latin American stock indexes and currencies at 1930 GMT:

Latest Daily %

change

MSCI Emerging Markets 1010.06 -2.01

MSCI LatAm 2383.60 -2.07

Brazil Bovespa 124762.38 -0.46

Mexico IPC 55897.79 -0.15

Chile IPSA 6422.73 -0.88

Argentina MerVal 1219841.07 1.863

Colombia COLCAP 1374.14 -0.44

Currencies Latest Daily %

change

Brazil real 5.2648 -1.56

Mexico peso 17.0382 -1.85

Chile peso 980 -0.18

Colombia peso 3915.63 -0.21

Peru sol 3.7427 -0.50

Argentina peso 868.5000 0.00

(interbank)

Argentina peso 1015 0.00

(parallel)