*

Israel's shekel, dollar bonds slide on escalating tensions

*

Brazil, Chile central banks slated to hold rates steady

next

week

*

Peru central bank holds benchmark rate at 4.5%, as

expected

*

Crude oil prices spike as much as 8%

(Updates with afternoon trading levels)

By Nikhil Sharma and Shashwat Chauhan

June 13 (Reuters) - Emerging market stocks and

currencies declined on Friday as investors shunned risky assets

amid growing conflict between Israel and Iran, with Latin

American assets also swept up in the global selloff.

Iran's state news agency IRNA said late on Friday that

hundreds of ballistic missiles had been launched in retaliation

for Israel's biggest ever attacks on Iran.

Israel's shekel plunged 1.9% against the dollar,

while its dollar-denominated sovereign bonds fell about 1 cent

each on the dollar. MSCI's index tracking Israeli equities

dropped 2.4%.

MSCI's index tracking emerging market equities was

last down 1%, though set for firm weekly gains.

Sovereign dollar bonds of frontier nations too slid across

the board, with longer duration maturities of Egypt, El Salvador

and Sri Lanka all clocking losses.

In Latin America, Mexico's peso shed 0.4% and Chile's

peso slipped 0.7% against the dollar.

Brazil's real shed most of its losses on the day and

was last flat at 5.53 per dollar.

Investors have been monitoring Brazil's push for a new

fiscal package to lift tax revenues and restore fiscal balance.

The country's central bank is widely expected to hold its main

lending rate steady next week.

Chile's central bank, too, is expected to hold its lending

rate steady when it meets next week. Peru's central bank held

its benchmark interest rate at 4.5% in a decision late on

Thursday.

Mexican central bank Deputy Governor Jonathan Heath said on

Friday that the bank should avoid cutting its benchmark interest

rate by 50 basis points until inflation resumes a clear downward

trajectory.

In Colombia, four sources from government agencies and the

Congress told Reuters that the government will present a tax

reform bill to Congress to raise 19 trillion pesos ($4.53

billion) more to help fund the 2026 budget.

On Friday, escalating geopolitical tensions prompted

investors to seek safe-haven assets such as the U.S. dollar. The

greenback firmed 0.5%.

"Whether these trends persist or reverse will depend on how

long and intense the conflict is and whether other regional

actors get involved, and second, whether there is any additional

impact on oil transit through the Persian Gulf which can cause a

larger shock to global inflationary pressures," Goldman Sachs

analysts said.

MSCI's index tracking Latin American currencies

was flat, hovering near a record high, while an

index for stocks shed 0.2%.

Brazil's local index dipped 0.3%, though surging oil

stocks helped crimp losses as supply concerns in the Middle East

lifted oil prices more than 8%.

Joan Domene, senior economist at Oxford Economics, said

losses in Latin America were restrained by a jump in commodity

prices.

In Buenos Aires, the main stock index fell 2.9%

while Argentina's international dollar bonds fell in tandem with

the global risk aversion.

Highlights:

** Brazil services activity grows 0.2% in April (Read more)

** Former Bolsonaro aide to face questioning, arrest order

suspended, media reports (Read more)

** Expenses portion of Brazil fiscal package to save

government $2.7 billion through next year (Read more)

Key Latin American stock indexes and currencies:

Equities Latest Daily % change

MSCI Emerging Markets 1190.69 -1

MSCI LatAm 2278.62 -0.24

Brazil Bovespa 137354.18 -0.32

Mexico IPC 57390.71 -0.76

Argentina Merval 2125095.0 -2.86

6

Chile IPSA 8218.99 -0.61

Colombia COLCAP 1643.54 -0.32

Currencies Latest Daily % change

Brazil real 5.5372 0

Mexico peso 18.9387 -0.38

Chile peso 936.1 -0.68

Colombia peso 4132.5 0.47

Peru sol 3.619 -0.3

Argentina peso 1182 0.25

(interbank)

Argentina peso (parallel) 1170 1.71