* MSCI LatAm stocks down 1.7%, FX up 0.4%

* 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 closing levels)

By Utkarsh Hathi and Avinash P

July 29 (Reuters) - Latin American currencies were mixed

against the dollar on Wednesday as investors parsed the Federal

Reserve's policy decision, while most equities slipped 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 Federal Open Market Committee 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 at least not as

benign as before and potentially tighter," said Petar Atanasov,

co-head of sovereign research and strategy at Gramercy.

The U.S. dollar index slipped following the decision,

but recovered later and was up 0.2%. The MSCI Latin American

currency index rose 0.4%.

The Colombian peso edged 0.2% lower 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

tend to drive inflection points in currencies and/or credit.

Colombia was no exception earlier this year," Atanasov added.

The Latin American equities index fell 1.7% as

oil prices rose more than 7% after three straight sessions of

sharp losses afterhostilities 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 surging crude 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 dropped 1.5%, but the fall

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

Petrobras after it reported strong Q2 production

figures.

The real was muted.

Equities in Argentina slipped 0.7%, while Mexico's

benchmark fell 1.2%.

Argentina's currency was traded 0.3%, but

Mexico's peso traded 0.2% lower.

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.

The Peruvian sol firmed 0.3%.

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

Stock indexes Latest Daily % change

MSCI Emerging Markets 1557.2 -0.16

MSCI LatAm 2998.74 -1.73

Brazil Bovespa 173885.34 -1.52

Mexico IPC 66479.89 -1.23

Chile IPSA 10935.89 0.52

Argentina MerVal 3233105.22 -0.71

Colombia COLCAP 2304.68 0.15

Currencies Latest Daily %

change

Brazil real 5.1178 -0.01

Mexico peso 17.4685 -0.22

Colombia peso 3189.66 -0.19

Peru sol 3.3912 0.27

Argentina 1,495.0 0.33

peso

(interbank)

Argentina 1,550.0 1.27

peso

(parallel)