EMERGING MARKETS-Global risk-off mood, stronger dollar catches Latam stocks and currencies

* Brazil Aug. retail sales beat estimates, but pressures remain * Vale down as Q3 iron ore output disappoints * Latam stocks fall 1.4%, FX slip 0.8% (Updated at 3:50pm ET/1950 GMT) By Johann M Cherian Oct 18 (Reuters) - Risk aversion across global markets dampened Latin American assets on Wednesday, with equities and currencies falling as investors across the globe turned cautious amid a tense geopolitical environment in the Middle East. MSCI's gauge of regional currencies slipped 0.9%, on pace for its worst day in over two weeks, as the U.S. dollar strengthened. Currencies of Mexico, Chile and Colombia fell between 0.9% and 1.5%. U.S. President Joe Biden pledged solidarity with Israel during a visit, amid anti-Israeli demonstrations around the Middle East that raised worries about further instability. Brazil's real was about flat, outperforming its peers after data showed Brazil retail sales in August overshot market expectations, despite still posting a small decrease on a monthly basis, signaling the sector remains under pressure amid high borrowing costs. "The drag from fiscal and monetary policy is yet to reach its peak though, while the boost from the agriculture sector and the mini commodity boom has started to fade," said Felipe Camargo, senior emerging markets economist at Oxford Economics. Brazil's central bank governor reiterated his belief that cutting its benchmark interest rate by 50 basis points per meeting is the appropriate pace for its ongoing monetary easing cycle. In Mexico, central bank deputy governor Omar Mejia said the balance of risks for inflation has not deteriorated. Major copper producer Peru's sol dipped 0.7%, giving up earlier gains made after prices of the red metal rose on better-than-expected economic data from China. Currencies and equities in South America have remained rangebound over the past few sessions as investors assessed the broader impact of the Israel-Hamas conflict amid lingering concerns about U.S. interest rates. Argentina's peso jumped to 885 to the dollar in parallel trade after the central bank said China has cleared a currency swap line totaling a freely accessible $6.5 billion, part of a broader deal the country has been using to help it defend the embattled peso, which slumped beyond 1,000 to the dollar earlier in October. Meanwhile, stocks in the region shed 2%, also eyeing its biggest daily decline in two weeks, with Brazil's Bovespa and Mexico's benchmark index down 1.7% and 0.8% respectively. Among single stocks, Vale SA dropped 3.4% after the Brazilian miner reported a 3.9% annual decline in its third-quarter iron ore output, hit by a production snag at a key mine. SQM lost 1.8% after brokerage BofA Global Research downgraded the Chilean lithium producer to "underperform" from "neutral." Key Latin American stock indexes and currencies at 1950 GMT: Latin Latest Daily % American market prices change from Reuters MSCI Emerging Markets 942.25 -0.94 MSCI LatAm 2205.80 -2.05 Brazil Bovespa 113957.13 -1.68 Mexico IPC 49241.37 -0.85 Chile IPSA 5796.44 -1.6 Argentina MerVal 804771.86 -2.296 Colombia COLCAP 1134.48 1.37 Currencies Latest Daily % change Brazil real 5.0559 -0.04 Mexico peso 18.2349 -1.24 Chile peso 943.9 -0.86 Colombia peso 4254.5 -1.51 Peru sol 3.8605 -0.70 Argentina peso 350.0500 0.01 (interbank) Argentina peso 885 11.30 (parallel) (Reporting by Johann M Cherian and Lisa Mattackal in Bengaluru; editing by Jonathan Oatis)