* MSCI LatAm FX, stocks set for sharpest weekly falls

since March

* Elevated oil prices lift dollar, global bond yields

* Brazil's real eyes steepest weekly drop in nearly four

years

* Venezuelan bonds ease day after rally on restructuring

progress

(Updates with afternoon trading levels)

By Purvi Agarwal, Avinash P and Johann M Cherian

May 15 (Reuters) - Latin American assets slid on Friday

and were on track for weekly losses as geopolitical tensions,

inflation worries and political uncertainty in the region

dampened risk appetite.

MSCI's index tracking LatAm stocks was down

2.66%, its weakest level in over a month, while the currencies

equivalent was off 1.44%, on track for its

biggest one-day decline in more than two months.

The stocks index was on track for a weekly decline of nearly

6%, while the currencies gauge was poised for a 2.2% loss.

Investors grew nervous as U.S. President Donald Trump left

China following a two-day summit with no apparent help from

Beijing to end the Iran war. Trump said he was losing patience

with Iran to secure a peace deal to end the conflict, which is

now in a fragile ceasefire.

Intensifying energy-induced inflation fears lifted the safe

haven dollar, while yields on global bonds soaredon

expectations that central banks, especially the U.S. Federal

Reserve, would err on the side of caution regarding monetary

policy.

In LatAm as well, yields on local currency bonds of Brazil

, Mexico and Colombia were

higher.

"EM can do well if the Federal Reserve is not able to cut

due to strong global growth, but would be more vulnerable in a

scenario of asymmetric growth favoring the US and/or a global

stagflationary shock," said analysts at BofA Global Research.

"In the FX space, the BRL should continue to be supported by

the commodity outlook and monetary policy, even if the election

trigger remains several months ahead."

POLITICAL JITTERS IN BRAZIL AND PERU

Brazil's real led declines among regional peers, down

1.71%, and set for its weakest weekly performance since November

2022.

Senator Flavio Bolsonaro's chances in Brazil's October's

presidential elections could be impacted by a report linking him

to a disgraced banker, which have alsojolted markets.

Brazil has been grappling with high interest rates and

deteriorating public finances under President Luiz Inacio Lula

da Silva. There are fears that Lula's re-election could drive

investors away from Brazilian markets. Opinion polls currently

put him and Flavio Bolsonaroat even odds.

Local stocks fell 0.87%, to touch their lowest level

in nearly two monthsas lender Itau Unibanco's1.7% dip

weighing on stocks.

Peru's sol and stocks were down

0.35% and 2.44% respectively, a day after its central bank held

interest rates steady at 4.25%, as expected.

The country has been roiled with political uncertainty

following allegations of voter fraud in the recently held

elections.

Leftist presidential candidate Roberto Sanchez will face

Keiko Fujimori in the June runoff after narrowly securing second

place in April's first-round vote, official results showed

Friday, after all votes were tallied.

Markets have been cautious about Sanchez's presidential bid

amid concerns of greater state control over resources and his

ties to jailed former leftist President Pedro Castillo.

Colombia's Peso and equities declined 0.52%

and 0.82% respectively. The country is also headed to the polls

later this month.

Data showed the economy expanded 2.2% in the first three

months of 2026 compared with the same quarter last year,

Colombia's official statistics office DANE said, in line with

analysts' expectations.

Chile's peso weakened 1.31%, while its equities

shed 0.9%. Copper prices fell nearly 5% on Friday,

hurting the world's largest red metal exporter.

Mexican stocks were hurt by a 4.5% drop in miner

Grupo Mexico, while the peso depreciated

0.74%, in line with regional trends.

Meanwhile, Venezuela's bonds eased after a rallyin the

previous session after the country said it would restructure its

bonds in one of the most complex exercises ever undertaken.

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

MSCI Emerging Markets 1668.33 -2.82

MSCI LatAm 3018.2 -2.66

Brazil Bovespa 176807.67 -0.87

Mexico IPC 68188.11 -1.47

Chile IPSA 10387.62 -0.9

Argentina Merval 2710895.3 -1.325

2

Colombia COLCAP 2104.49 -0.82

Brazil real 5.0652 -1.71

Mexico peso 17.3437 -0.74

Chile peso 907.63 -1.31

Colombia peso 3795.94 -0.52

Peru sol 3.4331 -0.35

Argentina peso (interbank) 1394.5 -0.22

Argentina peso (parallel) 1395 1.79