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EMERGING MARKETS-Latam FX weaker as dollar firms after Fed minutes

(Recasts throughout, updates prices, adds market analyst's quote) By Aaron Saldanha Feb 20 (Reuters) - Most Latin American currencies softened on Wednesday against the dollar after minutes from the U.S. Federal Reserve's latest policy meeting turned out to be less dovish than expected, while a drop in Brazilian shares offset gains in other Latam stocks.

The dollar rose after the Fed minutes showed the central bank had not entirely ruled out the prospect of raising interest rates in 2019.

The Fed continues to leave open the door to a rate hike in the coming months, contrary to financial markets' expectation that U.S. borrowing costs would not rise this year, CI Banco analyst James Salazar wrote in a research note.

MSCI's index of Latin American stocks fell 0.5 percent, pulled lower by Brazilian equities.

Emerging market assets fell sharply in 2018, as the dollar strengthened on the back of Fed rate hikes and fears that the U.S.-China trade war would crimp global economic growth.

Mexico's peso weakened 0.4 percent. Trading volumes surged to about 180 percent of their average level over the past week, following the Fed minutes' release, data on Refinitiv Eikon showed.

Mexican stocks tacked on half a percent, as Cemex gained 2.8 percent after announcing the sale of some European assets for about $385 million.

The cement maker said it would use proceeds from the deal to cut its debt load, as it seeks to regain its investment-grade rating.

Brazil's real dipped 0.1 percent while Sao Paulo-traded stocks fell 1.1 percent, with losses in most sectors except materials.

While the government's pension reform proposal made its way to the country's congress, market participants believed most of the optimism had been already priced in.

The yield spread on local, 10-year Brazilian bonds over their U.S. peers hit its widest in more than a week during the session.

Argentina's stocks benchmark rose 0.6 percent, with energy firm YPF SA riding higher oil prices to notch a 1.3 percent gain.

The local peso sank to a more than 4-1/2-month low before paring losses.

Argentina's central bank, which has been snapping up dollars over the past month, reversed gears as it intervened in futures markets to shore up the peso.

A rise in copper prices supported Chile's peso, which firmed 0.4 percent, while local stocks tacked on half a percent.

Key Latin American stock indexes and currencies at 2134 GMT Stock indexes daily % Latest change MSCI Emerging Markets 1049.32 1.19 MSCI LatAm 2882.68 -0.5 Brazil Bovespa 96544.81 -1.14 Mexico IPC 43178.00 0.53 Chile IPSA 5410.50 0.45 Argentina MerVal 36503.51 0.58 Colombia IGBC 12008.20 -0.12 Currencies daily % change Latest Brazil real 3.7301 -0.08 Mexico peso 19.2217 -0.43 Chile peso 652.8 0.37 Colombia peso 3109.4 0.16 Peru sol 3.318 -0.06 Argentina peso (interbank) 39.6500 -0.91 (Reporting by Aaron Saldanha in Bengaluru; Editing by Richard Chang)