EMERGING MARKETS-Latam assets slump on Fed rate concerns, Argentina peso touches fresh record low

* Latam FX down 1.7%, stocks down 3.2% * MSCI Latam Stocks index set for worst day since Dec * Brazil's industrial output rises less than expected * Argentina's bonds, peso hit ahead of elections (Updated at 3:45pm ET/1945 GMT) By Johann M Cherian and Lisa Pauline Mattackal Oct 3 (Reuters) - Latin American markets slumped on Tuesday, with indexes tracking currencies and stocks both set for their worst day in months as rising U.S. Treasury yields dented the appeal of risk assets, while Argentina's peso hit a fresh record low. MSCI's index of Latin American currencies was down 1.7%, trading at a four-month low in its biggest daily loss since February, while the index tracking stocks fell 3.2% to a five-month low in its worst day since December. Strong U.S. jobs data bolstered the case for U.S. rates to stay higher for longer even as many Latin American central banks have entered a rate-cutting cycle, a factor that has dented Latam assets as high U.S. borrowing costs take the shine off yields on regional currencies. "The most important factor is this rising gap between U.S. rates and Latam countries, and how much further the U.S. is going to hike is not clear," said Lucas Costa, Latam economist at Continuum Economics. Argentinian markets continued to slide on uncertainty ahead of elections this month, as the peso slumped to a record low of 805 per dollar in parallel trade. The Brazilian real hit its lowest level since March at 5.15 to the dollar, and was last down 1.7% after data showed industrial production in Latin America's largest economy rose 0.4% in August, slightly less than expectations of a 0.5% increase. "The data, while it's below expectations, still confirms that economic activity in Brazil is quite resilient ... the selloff in the BRL is a continuation of the overall global macro environment where the dollar is strong and on the flip side of this, EM FX is weak," said Olga Yangol, head of EM research & strategy at Credit Agricole. Brazil's current pace of monetary policy easing is "appropriate" for the moment, central bank chief Roberto Campos Neto said. Mexico's peso dropped 1.6% against the dollar to its lowest since May, and Colombia's peso fell 1.5% to three-month lows as with crude oil prices fell. Colombia reported exports worth $3.95 billion in August, down 10.1% year-on-year, the government's DANE statistics agency said on Tuesday. Mexico's benchmark index eyed its worst day in over a month, dropping 1.8% while equities in Brazil, Chile and Colombia fell between 0.3% and 1.5%. Major copper producer Chile's peso fell 0.7% as prices of the red metal fell to four-month lows. Key Latin American stock indexes and currencies at 1945 GMT: Stock Indexes Latest Daily % change MSCI Emerging 937.64 -1.46 Markets MSCI LatAm 2184.30 -3.21 Brazil Bovespa 113360.5 -1.47 9 Mexico IPC 50358.64 -1.76 Chile IPSA 5685.84 -1.25 Argentina MerVal 561196.8 0.785 1 Colombia COLCAP 1109.86 -0.26 Currencies Latest Daily % change Brazil real 5.1549 -1.73 Mexico peso 17.9540 -1.62 Chile peso 914.9 -0.74 Colombia peso 4222.85 -1.50 Peru sol 3.821 -0.97 Argentina peso 350.0000 0.01 (interbank) Argentina peso 805 -0.62 (parallel) (Reporting by Amruta Khandekar, Johann M Cherian and Lisa Mattackal in Bengaluru; Editing by Josie Kao and Cynthia Osterman)