*

Chile cenbank to cut interest rate by 50bps in May: poll

*

Mexican inflation coming from abroad -finance official

*

Mexican peso recovers from 5% plunge

*

Latam FX up 0.6%, stocks add 1.1%

(Updated at 3:45pm ET/1945 GMT)

By Bansari Mayur Kamdar

April 19 (Reuters) -

Latin American stocks and currencies steadied on Friday,

recovering from early losses on easing concerns about tensions

between Israel and Iran, though emerging market shares were set

for their worst week in 10 months as investors grew more

cautious.

Israel launched an attack on Iranian soil, sources told

Reuters, sparking a global risk-off mood in markets that calmed

somewhat after Tehran signaled it had no plans for retaliation.

The dollar and Treasury yields also fell, relieving pressure

in the past week from Mideast tensions and the shift to more

hawkish Federal Reserve expectations.

MSCI's index of global emerging market stocks

lost 1.3% on Friday and was set for its worst week since June.

The MSCI index for Latam currencies

briefly touched its lowest since November, but recovered to rise

0.6% on the day. It was on track for its second week of declines

as the dollar strengthened.

"For emerging market currencies outside Asia-Pacific,

geopolitical worries and the general reassessment of the Fed

outlook were painful," UBS strategists said in a note.

The broader emerging market currencies index

was flat on the day, and edged down 0.2% on the

week.

Mexico's peso recovered some ground after

falling

nearly 5%, last down 0.2%. The peso is down 3% this week,

its worst weekly performance since October as a flight to safety

hit one of the world's most liquid emerging market currencies.

The Bank of Mexico's deputy

governor

said he saw interest rates on hold for longer than

initially expected, while data showed Mexican retail sales rose

0.4% in February from January.

Brazil's real rose 1% against the dollar but was

still on track for its seventh straight weekly loss.

Bucking regional weakness, currencies of top copper

producers Chile and Peru both advanced 1.2% as

copper prices soared to a two-year high on fund buying spurred

by supply concerns.

Shares of Brazil's state-owned oil giant Petrobras

rose 1.8% after newspaper O Globo reported the

company is expected to pay all of the extra dividends withheld

in March.

Elsewhere, an IMF official said it was "a matter of

time" before

Ghana

agreed to a restructuring with holders of its international

bonds.

HIGHLIGHTS:

** Political heat prods Japan, South Korea to team up on

weak currencies

**Vietnam central bank: ready to intervene in FX market

**South Korea to take decisive action if needed to stabilize

FX market

**S&P cuts Israel's credit rating on geopolitical risk

Key Latin American stock indexes and currencies at 1945 GMT:

Latest Daily %

change

MSCI Emerging Markets 1005.21 -1.31

MSCI LatAm 2411.90 1.1

Brazil Bovespa 124996.70 0.64

Mexico IPC 55950.21 0.38

Chile IPSA 6380.83 -1.09

Argentina MerVal 1193571.44 1.769

Colombia COLCAP 1332.89 0.9

Currencies Latest Daily %

change

Brazil real 5.1987 0.99

Mexico peso 17.1158 -0.24

Chile peso 953.4 1.29

Colombia peso 3905.74 0.44

Peru sol 3.6703 1.26

Argentina peso 871.0000 -0.11

(interbank)

Argentina peso 995 3.02

(parallel)