EMERGING MARKETS-Latam FX rise as dollar pulls back against euro

* MSCI index for Latam currencies rises * Brazil's net formal job growth in July below forecasts * Chilean peso reverses declines to edge higher (Adds comments, updates prices throughout) By Shreyashi Sanyal Aug 29 (Reuters) - Latin American currencies rose on Monday as the dollar retreated after scaling a new 20-year high against a stronger euro, while Chile's peso recouped earlier declines and regained footing. The MSCI's index for Latin American currencies rose 0.8% as the dollar dipped against a firm euro, which was supported by growing expectations for European Central Bank (ECB) rate hikes. Brazil's real gained 1%. Investors watched as Brazil's main presidential candidates faced off in the first presidential debate on Sunday ahead of an October election in Latin America's largest economy. Separately, Brazil created 218,902 formal jobs in July as the labor market continued its post-pandemic recovery, government data showed. Although the net gain was below the 260,000 jobs expected by economists in a Reuters poll, it marked a seventh straight month of employment growth. Mexico's peso and the Colombian peso rose 0.3% and 0.8%, respectively. Still, worries remained of expectations that U.S. interest rates will remain higher for longer than markets have been expecting after Federal Reserve Chair Jerome Powell's hawkish speech on Friday to the Jackson Hole economic symposium in the United States. Rising interest rates in the developed world make emerging market assets less attractive, as central banks in the developing world reach a more mature stage in their monetary tightening cycles. "It's a first to say that comments from Chair Powell at Jackson Hole must have been a fresh reality check to those investors who hoped that the Fed is going to make a pivot and may start cutting interest rates as soon as the middle of next year," said Piotr Matys, senior FX analyst at In Touch Capital Markets. "The prospect of higher interest rates and staying at relatively high levels for extended period of time in the U.S. don't bode well for risky assets ... especially for those EM currencies." The currency of the world's top copper producer, Chile added 0.8%, reversing earlier declines. Investors also were bracing for a vote in a week's time in Chile to decide on a proposed constitution, written by predominantly independent and progressive elected constituents, that promises sweeping changes to the Andean country's institutions. "The peso could benefit from a rejection of the new constitution on September 4th. Given stretched valuations, there is room for retracement if Chileans reject the new constitution proposal, which as all recent polls suggest, we believe may happen," said Sebastian A. Brown, chief economist at Deutsche Bank. Key Latin American stock indexes and currencies at 1941 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 992.54 -1.39 MSCI LatAm 2237.03 0.36 Brazil Bovespa 112840.88 0.48 Mexico IPC 46365.24 -1.92 Chile IPSA 5504.78 0.77 Argentina MerVal 144731.11 2.312 Colombia COLCAP 1289.24 -0.74 Currencies Latest Daily % change Brazil real 5.0257 1.03 Mexico peso 20.0097 0.03 Chile peso 884.3 0.78 Colombia peso 4364.48 0.68 Peru sol 3.8184 0.04 Argentina peso (interbank) 138.3000 -0.43 Argentina peso (parallel) 288 1.39