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EMERGING MARKETS-Brazil leads Latam assets lower after Fed comments

By Susan Mathew

(Updates prices) By Susan Mathew June 25 (Reuters) - Latin American currencies and stocks slid on Tuesday, led by Brazil assets, after comments from the U.S. Federal Reserve chief saw traders trim bets of a half-point cut in U.S. interest rates in July. The dollar recovered from three month lows hit earlier in the session, while U.S. stocks remained pressured. Most Latam stock indexes tracked Wall Street amid already subdued sentiment on Chinese-U.S. trade anxiety and rising tensions between the United States and Iran. MSCI's index of regional currencies slipped 0.4% with Brazil's real down 0.7%, while its index of Latam stocks lost 1.5%. Gains on the regional MSCI indexes over recent weeks have been fueled by expectations of more stimulus from both the Fed and the European Central Bank. Fed Chair Jerome Powell pushed back on pressure from President Donald Trump to cut rates, saying that policymakers were grappling with whether trade uncertainties and other issues supporting interest rate cuts. Earlier, St. Louis Fed President James Bullard in an interview with Bloomberg said he does not think the Fed needs to cut rates by a half-percentage point at its next policy meeting, in late July. Investors had broadly started to price in increasing chances of a cut in the Fed's key rates next month. Lower U.S. interest rate tend to boost the relative attractiveness of developing world assets, usually spurring broad inflows into emerging markets. Mexico's peso lost 0.1% and hit two-week lows. Mexico City's IPC stock index edged higher. Mexico's central bank is expected to hold its benchmark interest rate steady at 8.25% on Thursday, a Reuters poll showed, after annual inflation slowed this month more than expected. Brazil's real steepened losses, while the main stock index slid 1.5% after four days of gains. Brazil's economy is stagnating and price pressures are evolving "favorably," but uncertainty surrounding economic and fiscal reforms is clouding the growth and inflation outlook, minutes of the central bank's rate-setting committee, known as Copom, showed. "Our impression is that the tone of the Copom minutes seeks to cool a bit market expectations of a rate cut in July. Yet it does keep the door open for policy easing at some point," wrote Mauricio Oreng, a senior Brazil strategist at Rabobank. Oreng said the first-round approval of an effective pension reform in Congress's Lower House may be the "concrete progress" in reforms that the bank reiterated as a condition to consider rate cuts. He said that three rate cuts of 50 basis points from September onwards could be expected. The lower house vote on pension reform is expected to take place before lawmakers break for recess on July 18, presidential spokesman Otavio Rego Barros said on Tuesday. Argentine assets eked out gains, as did the Colombian peso , which hit a two-month high. Key Latin American stock indexes and currencies at 1940 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1044.67 -0.8 MSCI LatAm 2833.00 -1.54 Brazil Bovespa 100206.98 -1.82 Mexico IPC 43791.35 0.11 Chile IPSA 5089.23 -0.03 Argentina MerVal 40231.40 0.3 Colombia IGBC 12675.15 -0.16 Currencies Latest Daily % change Brazil real 3.8507 -0.65 Mexico peso 19.2180 -0.13 Chile peso 680.8 -0.03 Colombia peso 3188.4 0.10 Peru sol 3.304 -0.09 (Reporting by Susan Mathew in Bengaluru; Editing by Leslie Adler)