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EMERGING MARKETS-Brazil rate futures fall on bets of steeper rate cut

(Updates with final prices) By Bruno Federowski SAO PAULO, March 10 (Reuters) - Yields on Brazilian interest rate futures fell sharply on Friday as slower-than-expected inflation data fueled bets that the central bank will increase the magnitude of interest rate cuts next month.

Brazil's official inflation index rose at its tamest pace since 2010 in the 12 months through February, below expectations of all 24 economists polled by Reuters.

Rate future yields indicated an 80 percent probability Brazil's central bank would cut rates by 100 basis points at its monetary policy meeting in April, traders said, with a 20 percent likelihood of a 75 basis point cut.

The central bank has said the size of the rate cut will hinge on inflation expectations and economic data. It cut the benchmark Selic overnight lending rate by 75 bps each in January and February. The rate is currently at 12.25 percent.

The prospect of lower rates also supported Brazil's benchmark Bovespa stock index, which rose 0.14 percent.

The Brazilian real strengthened 1.6 percent, leading gains among Latin American currencies, after it slipped over 2 percent in the first four days of the week, its sharpest four-session percentage drop in three months.

Strong U.S. jobs figures consolidated expectations the U.S. Federal Reserve will raise interest rates next week. While that could reduce the allure of high-yielding emerging market assets, traders said markets had anticipated the result.

Mexico's IPC stock index fell, dragged down by a 2.5 percent drop in shares in Carlos Slim's America Movil, which had already slipped more than 4.5 percent on Thursday after the telecoms giant revealed it was facing tougher antitrust regulation.

Key Latin American stock indexes and currencies at 2215 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 926.14 0.35 7.41 MSCI LatAm 2,540.59 0.72 8.54 Brazil Bovespa 64,675.46 0.14 7.39 Mexico IPC 47,102.31 -0.34 3.20 Chile IPSA 4,474.88 0.15 7.79 Chile IGPA 22,487.72 0.17 8.46 Argentina MerVal 18,895.91 0.58 11.69 Colombia IGBC 9,926.64 0.47 -1.99 Venezuela IBC 38,545.32 -1.02 21.57 Currencies Latest Daily YTD pct pct change change Brazil real 3.1435 1.60 3.36 Mexico peso 19.600 1.16 5.84 Chile peso 663.8 0.18 1.04 Colombia peso 2,984.5 0.37 0.57 Peru sol 3.283 0.21 3.99 Argentina peso (interbank) 15.4700 0.45 2.62 Argentina peso (parallel) 15.99 -0.12 5.19 (Reporting by Bruno Federowski; Editing by Alistair Bell)