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MSCI Latam FX index down 1.1%; stocks off 2%

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EU, Mercosur sign free trade deal

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Banco do Brasil slides on Citi downgrade

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Colombia inflation data on tap

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Chile's consumer prices up 0.2% in November

(Updates to afternoon trading)

By Pranav Kashyap and Johann M Cherian

Dec 6 (Reuters) - Most Latin American currencies slipped

on Friday against a choppy U.S. dollar, while investors awaited

inflation data out of Colombia and monitored developments

surrounding a trade deal between the region's biggest economies

and the European Union.

MSCI's index tracking currencies in the region

lost 1.1% after three-straight sessions of

advances, and was set for weekly declines as the greenback

see-sawed between gains and losses and was last up 0.3%.

U.S.

data pointed to a resilient labor market

which some analysts said was

in line with expectations

and raised bets that the Federal Reserve will lower

interest rates by 25 basis points later in the month.

The dollar's gain pressured the Brazilian real that

led losses in the region and was set to snap a three-day winning

streak. It was trading 1% lower.

A Reuters poll showed the Brazilian central bank is expected

to intensify its interest rate hike campaign with a significant

75 basis point increase on Dec. 11. Still, the real is down over

20% this year as markets weigh the country's latest fiscal

policies that some analysts say could stoke inflation pressures.

Chile's peso weakened 0.6% after data showed consumer

prices in the top copper producer rose by a less-than-expected

0.2% in November.

Andrés Abadía, chief Latam economist at Pantheon

Macroeconomics, cautioned that "risks are tilted to the upside

due to heightened global uncertainty, which has renewed pressure

on the (peso), along with the potential impact of increased

electricity tariffs starting in January".

The Mexican peso was flat at 20.17. Mexico's

migration agencies face a budget shortfall, sources said,

challenging their capacity to handle mass deportations proposed

by President-elect Donald Trump.

Markets have been pricing in the potential repercussions

Trump's policies can have on Latam's second largest economy,

with the peso down over 15% this year and the local stocks index

the worst performer among peers - down over 10% over the

same period.

Later in the day, investors will scrutinize an inflation

report for the month of November out of Colombia, ahead of which

the peso was flat, while the Colcap equities index

dropped 0.9%.

Markets also assessed details of a

free trade deal

between the EU and South America's Mercosur bloc, which

includes Brazil, Argentina, Uruguay and Paraguay, that was

signed after over two decades of talks.

MSCI's index tracking local stocks slid 2%,

with heavyweight Brazil's Bovespa falling 1.5%.

Banco do Brasil lost 3% after a rating

downgrade by brokerage Citigroup.

The Argentine peso (ARS=) was flat following the central

bank's decision on Thursday to lower the benchmark interest rate

from 35% to 32%. The local Merval equities index dipped

0.6%.

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

MSCI Emerging Markets 1104.39 0.19

MSCI LatAm 1998.45 -1.99

Brazil Bovespa 125973.35 -1.47

Mexico IPC 51336.54 -0.81

Chile IPSA 6648.7 -0.17

Argentina Merval 2198379.5 -0.597

2

Colombia COLCAP 1381.89 -0.91

Brazil real 6.0766 -1.09

Mexico peso 20.1777 0.01

Chile peso 974.84 -0.62

Colombia peso 4408.46 0.01

Peru sol 3.716 0.12

Argentina peso (interbank) 1012.5

flat

Argentina peso (parallel) 1030 2.37