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EMERGING MARKETS-Brazil stocks drop on China data; caution before US jobs data

MEXICO CITY, Jan 9 (Reuters) - Brazilian stocks plunged on Thursday in their biggest one-day decline since September, dragged down by a slower-than-expected increase in Chinese consumer prices, with investors cautious a day ahead of U.S payrolls data.

Brazil's Bovespa slipped 2.48 percent to 49,321.68 points, taking the index to its lowest level since August. The Bovespa, which was one of the world's worst-performing indexes in 2013, is already down more than 4 percent this year.

China's annual consumer inflation slowed more sharply than expected and hit a seven-month low of 2.5 percent in December, data released on Thursday showed. Brazil is China's main source of iron ore.

Shares of mining company Vale SA led the index down with a decline of 3.7 percent. State oil producer Petrobras lost 3.03 percent, while bank Itau Unibanco dropped 3.12 percent.

Across the region, investors showed caution ahead of the release of monthly U.S payroll data on Friday. Any positive news could lead to declines in regional markets as it would raise the chances of the U.S. Federal Reserve further cutting its massive bond-buying scheme.

The asset-purchase program had driven interest in emerging market equities as investors sought higher returns from riskier asset classes, and cuts to the program are seen as denting local markets.

* In Brazil, shares of food processor BRF SA, the world's largest poultry producer, dropped 2.83 percent after Citigroup Global Markets Inc trimmed the price target for its U.S.-traded shares to $25 from $29 on lower earnings estimates for this year.

* Shares of América Latina Logística SA, Brazil's largest rail operator, jumped 8.8 percent after local newspaper Valor Economico reported the company was considering resuming merger talks with logistics operator Rumo Logistica.

* Shares of Braskem SA, Latin America's largest petrochemical company, added 0.25 percent after it sold a water treatment plant in the southern state of Rio Grande do Sul to Odebrecht Ambiental.

* Chile's IPSA index fell 1.21 percent to 3,645.12 points, thanks to a 3.78 percent decline in shares of bank Santander .

* Mexico's IPC index added 0.17 percent to close at 41,585.54 points, due to a 3.32 percent rise in shares of cement producer Cemex.