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EMERGING MARKETS-LatAm currencies up after weak U.S. inflation, retail data

By Bruno Federowski SAO PAULO, July 14 (Reuters) - Latin American currencies strengthened on Friday after weaker-than-expected U.S. economic data reduced bets on a third U.S. interest rate increase this year.

U.S. consumer prices were unchanged in June and retail sales fell for a second straight month, the latest in a batch of mixed reports that have kept traders skeptical over the Fed's stated plan for one more rate increase this year and three times in 2018.

On Thursday, Fed Chair Janet Yellen said it would be "quite challenging" for the United States to reach the 3 percent growth target set by President Donald Trump.

A slower pace of policy tightening could boost the allure of high-yielding emerging market assets, driving up the value of their currencies. The Mexican peso strengthened for the seventh straight day, while the Brazilian real firmed 0.8 percent.

Brazil's benchmark Bovespa stock index posted its fifth day of gains, with shares of engineering firm MRV Engenharia e Participações SA the biggest riser after posting solid growth in sales and launches in the second quarter.

Shares of Cia Energética de Minas Gerais SA, Brazil's No. 3 power utility, rose 3.3 percent after it closed a deal to transfer stakes in Transmineiras to Transmissora Aliança de Energia Elétrica, known as Taesa.

Cemig, as the utility is known, jointly controls Taesa with Brazilian investment fund Coliseu. The utility is looking to sell assets to cut debt.

Latin American stock indexes and currencies at 1700 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 1048.05 0.7 20.7 MSCI LatAm 2712.73 0.94 14.82 Brazil Bovespa 65351.15 0.27 8.51 Mexico S&P/BVM IPC 50903.48 -0.13 11.53 Chile IPSA 4987.71 0.03 20.15 Chile IGPA 24903.08 0.1 20.11 Argentina MerVal 21917.86 -0.27 29.55 Colombia IGBC 11017.93 -0.86 8.79 Venezuela IBC 129132.27 0.81 307.29 Currencies daily % YTD % change change Latest Brazil real 3.1836 0.75 2.06 Mexico peso 17.5655 0.65 18.10 Chile peso 657 0.55 2.09 Colombia peso 3016 0.99 -0.48 Argentina peso (interbank) 16.8300 0.73 -5.67 Argentina peso (parallel) 17.52 0.46 -4.00 (Reporting by Bruno Federowski; editing by Grant McCool)