*

Sheinbaum sworn in as Mexico's first woman president

*

Peru consumer prices slow in September to lowest since

2020

*

Iran hits Israel with salvo of ballistic missiles

*

Latam stocks up 0.2%, FX off 0.2%

(Updated at 3:25 p.m. ET/ 1925 GMT)

By Ankika Biswas and Shashwat Chauhan

Oct 1 (Reuters) - Most Latin American currencies dropped

against a firmer dollar on Tuesday as an escalation in Middle

East tensions steered investors away from risky assets to

safe-haven ones, though Mexico's peso reversed its initial

losses.

Iran fired a salvo of

ballistic missiles

at Israel in retaliation for Israel's campaign against

Tehran's Hezbollah allies in Lebanon, and Israel vowed a

"painful response" against its enemy.

"Military conflicts can quickly escalate into a scenario

that causes markets to sell off dramatically, with safe haven

assets such as gold and Treasuries seeing heavy inflows," said

Quincy Krosby, chief global strategist at LPL Financial.

"It is akin to lighting a match and suddenly the flame

can't be controlled."

Safe-haven assets such as gold, the Swiss franc

and the Japanese yen rose, while MSCI's index for

Latam currencies index fell 0.2%.

This comes on top of a strong U.S. dollar, propped by

easing bets of a 50-basis-point interest rate cut after Federal

Reserve Chair Jerome Powell's overnight comments, that had

pressured most emerging market asset classes after a strong

monthly performance.

Mexico's peso reversed losses to rise 0.4%. Claudia

Sheinbaum was sworn in as Mexico's first woman president, taking

the reins at a time the country is struggling with violence from

organized crime and a hefty deficit in Latin America's No. 2

economy.

Political watchers and analysts predict Sheinbaum will

urgently look to calm investors following the passing of a

controversial judicial reform pushed by her predecessor Andres

Manuel Lopez Obrador.

Also, the Bank of Mexico may consider larger interest

rate cuts going forward as inflation cools, bank governor

Victoria Rodriguez told Reuters. This follows last week's

25-basis-point rate cut.

The Brazilian real eased 0.2%, while Colombia's

peso slipped 0.1% against a firmer greenback.

Brazil's central bank chief said that the country's risk

premium

increase

on its local yield curve seems "exaggerated" compared with

peers, whose economies also are not generating primary

surpluses.

Peru's sol weakened 0.4% after

inflation

in September surprised analysts as it slowed to below 2%

for the first time in four years, increasing the odds that the

nation's central bank will extend a streak of interest rate

cuts.

A spike in metal prices on the back of China's series of

stimulus measures and the Federal Reserve's recent interest-rate

cut were the major drivers of emerging market stocks and

currencies' upbeat performance last month.

The drop in the resource-rich Latin American currencies

comes even as commodity prices were up on the day, with oil

prices jumping around 3% on the worsening geopolitical

situation.

Latin American equities added 0.2%. Local

bourses in Brazil and Argentina rose 0.7% and

2%, respectively.

HIGHLIGHTS:

** Zimbabwe bankers wary of more shocks after sharp ZiG

devaluation

** Romania aims to sell domestic debt worth 6.4 bln lei in

October

** Pakistan's annual consumer price inflation slows to 6.9%

in September

** Chile's economic activity jumps 2.3% year-on-year in

August

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1170.53 -0.03

MSCI LatAm 2242.29 0.22

Brazil Bovespa 132781.54 0.73

Mexico IPC 52477.3 -0.57

Chile IPSA 6452.64 -0.58

Argentina Merval 1732460.8 2.066

Colombia COLCAP 1308.23 0.05

Brazil real 5.458 -0.18

Mexico peso 19.601 0.39

Chile peso 904.67 -0.68

Colombia peso 4209.53 -0.08

Peru sol 3.7055 -0.44

Argentina peso (interbank) 969.5 -0.051572976

Argentina peso (parallel) 1200 2.916666667