* MSCI LatAm stocks down 0.8%, FX up 0.3%

* Fed holds rates steady as expected

* Lula leads Bolsonaro in potential Brazil runoff, poll

shows

* Bolivia, IMF reach deal on program worth $1.9 billion

(Updates with afternoon trading levels)

By Utkarsh Hathi and Avinash P

July 29 (Reuters) - Most Latin American currencies rose

against the dollar on Wednesday as investors parsed through the

Federal Reserve's policy decision, while equities were mixed as

investors took stock of developments in the Middle East.

The Fed held its interest rate at 3.50%-3.75%, as widely

expected, though doubts remain over its path to return inflation

to its 2% target. Three FOMC members dissented, favoring a

25-basis-point hike.

"What it means for emerging markets is that policymakers in

EM have to deal with an increasingly complex environment where

global financing conditions are likely to be not as benign as

before and potentially tighter", said Petar Atanasov, co-head of

sovereign research and strategy at Gramercy.

The US dollar index slipped 0.5% following the

decision. The drop lifted the Latin American currency index

0.3% higher.

The Colombian peso edged 0.5% higher, and hovered

near its strongest level in seven years.

The currency has outperformed its regional peers this year,

with the presidential election win by right-winger Abelardo de

la Espriella last month providing further momentum.

"Elections tend to be a huge driver of market sentiment and

drive those inflection points when there is an ability to

capture a changing direction in a currency and this is the case

that exactly happened in Colombia earlier this year," Atanasov

added.

The Latin American equities index fell 0.8%

as oil prices rose 7.4% after three straight sessions of sharp

losses as hostilities in the Middle East resumed, adding to

investor caution.

Stocks in the region have been largely shielded from the

broader emerging-market sell-off driven by the global technology

rout and rising oil prices.

Meanwhile, in Brazil, a poll showed that President Luiz Inacio

Lula da Silva was leading a potential second-round vote in the

October presidential election against opposition Senator Flavio

Bolsonaro.

Separately, the country's Treasury has asked the Senate for

authorization to issue up to $35 billion a year in international

debt markets, part of a strategy to increase the share of

foreign-currency-linked debt in its portfolio.

Brazil's Bovespa share index declined 1%, but the

fall was contained by a 2% gain in state-run oil firm Petrobras

after it reported strong Q2 production figures.

The real gained 0.5%.

Equities in Argentina added 0.3%, while Mexico's

benchmark declined 0.7%.

Argentina's currency was trading higher 0.3%, but

Mexico's peso was muted.

In Peru, Keiko Fujimori was sworn in as the nation's

first-ever elected female president on Tuesday, extending the

broader rightward shift in the region.

Local equities were trading 0.3% lower, while the sol

firmed.

Separately, Bolivia reached an agreement with the

International Monetary Fund on a program worth about $1.9

billion to support the country's economic reform agenda.

Key Latin American stock indexes and currencies

Latin American market

prices from Reuters

Equities Latest Daily %

change

MSCI Emerging Markets 1563.7 -1.19

MSCI LatAm 3027.96 -0.77

Brazil Bovespa 174805.66 -1

Mexico IPC 66821.21 -0.72

Chile IPSA 10906.02 0.24

Argentina Merval 3264501.5 0.25

7

Colombia COLCAP 2309.17 0.34

Currencies Latest Daily %

change

Brazil real 5.0963 0.48

Mexico peso 17.4256 -0.02

Chile peso 930.38 -0.02

Colombia peso 3187.06 0.48

Peru sol 3.4005 0.04

Argentina peso (interbank) 1495 0.33

Argentina peso (parallel) 1550 1.29