EMERGING MARKETS-Latam assets underperform EM peers, Brazil real leads fall

* Brazil real eyes worst week in over two years * Red-hot U.S. inflation sparks dollar rally * Peru's sol afloat after rate hike By Shreyashi Sanyal June 10 (Reuters) - Latin American stocks and currencies fell on Friday, set to end the week with declines far greater than those if its emerging market peers, with Brazil's real leading losses on worries of lockdowns in China and red-hot inflation boosting the dollar. The MSCI's index for Latin American stocks fell over 3% by 1436 GMT, and eyed declines of 8%. Equities were headed for their sharpest weekly fall in more than 19 months. The broader emerging markets stocks index shed 0.8% for the week. Worries of slowing demand from major trading partner, China has hurt markets in Latin America, as Shanghai announced new COVID-19 lockdown measures this week. Rising inflationary pressures along with more aggressive central bank policies from developed world central bank have also pushed investors away from riskier assets such as those in emerging markets. The MSCI's currencies index dropped 1.4% on Friday and 3% for the week, marking their worst performance since late September 2020. A red-hot reading on U.S. consumer prices for the month of May, not only boosted the dollar but also solidified bets of more tightening by the Federal Reserve. "Some of the Latam countries are sensitive to tightening of financial conditions globally and given that we saw the stock market in the U.S. having a hard time in part because of the Fed, that's something that is also affecting the Latam region," said Jakob Christensen, chief analyst and head of EM research at Danske Bank. Markets around the globe will be looking out for the U.S. Fed policy decision next week, where the central bank is expected to hike lending rates by 50 basis-points and continue with it. Brazil's real touched 5 to the dollar at one point during the day. The currency's 4.7% for the week, leading declines among Latam peers and marking its worst weekly decline in over two years. Next week also marks Brazil's central bank move. A Reuters poll showed it is set to deliver a 50 basis points rate increase on Wednesday to finalize a long tightening cycle against unbridled inflation that is beginning to see some results. Brazilian stocks fell 1.8%, with state-run oil company Petrobras down 3% after it received a court decision ordering it to halt talks with Petroreconcavo and Eneva SA for the sale of its Bahia-Terra cluster. Brazil's government on Thursday night moved forward with its bid to privatize Eletrobras, Latin America's largest utility, as it priced a share offering through which its stake in the company is set to be diluted. Shares of the company tumbled 5%. Lower commodity prices also hurt other Latin American currencies. Chile's peso slipped 1.6% on lower copper prices, while falling oil prices hurt Colombia's peso, which dropped 1.7%. The Mexican peso fell 1.2%, while Peru's sol gained 0.1% as it was supported by an interest rate hike by its central bank overnight. Key Latin American stock indexes and currencies at 1436 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1052.57 -1.37 MSCI LatAm 2238.01 -3.11 Brazil Bovespa 105048.09 -1.91 Mexico IPC 48666.68 -1.27 Chile IPSA 5151.30 -0.64 Argentina MerVal 87985.61 -0.995 Colombia COLCAP 1524.18 -0.17 Currencies Latest Daily % change Brazil real 4.9999 -1.71 Mexico peso 19.9140 -1.29 Chile peso 838.3 -1.60 Colombia peso 3907.1 -1.75 Peru sol 3.7401 0.09 Argentina peso (interbank) 121.7800 -0.11 Argentina peso (parallel) 206 0.97 (Reporting by Shreyashi Sanyal and Anisha Sircar in Bengaluru Editing by Alistair Bell)