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EMERGING MARKETS-Latam markets slip as rising trade worries spur flight to safety

By Susan Mathew

(New throughout, updates prices) By Susan Mathew Oct 8 (Reuters) - Most Latin American stocks and currencies fell on Tuesday as investors dumped risky assets for safer bets after an escalation of U.S.-China trade tensions, while Brazil's real rose after a day of sharp losses. The dollar lost some momentum, especially against the safe-haven Japanese yen after Federal Reserve Chairman Jerome Powell suggested openness to further rate cuts, but still managed to stay in the black. Latam currencies, except Brazil's real, slipped between 0.03% and 0.9% against the greenback after Washington imposed visa restrictions on Chinese government and Communist Party officials, further raising hostility between the two governments. Late on Monday, the Trump administration had widened its trade blacklist to include some of China's top artificial intelligence startups, just two days before high-level trade negotiations were to resume with Beijing. "We remain cautious on EMFX," wrote Morgan Stanley analysts in a note. "The headlines around trade talk remain fluid and the market is unlikely to get much clarity until October 11, and therefore it is likely to be range-bound for the time being." South China Morning Post reported that China toned down its expectations from the talks and that the delegation is already planning to cut short its stay in Washington. Brazil's real ticked 0.3% higher after posting a loss of more than 1% last session. Mexico's peso and stocks fell despite a U.S. Democratic lawmaker saying a meeting with Mexican officials aimed at speeding up ratification of a North American trade deal was "excellent." Shares of retailer Walmart de Mexico was the worst performer on Mexico's benchmark index after it reported weaker than expected September sales. Other regional stock markets also slipped, with Brazil shares giving up session gains of as much as 0.8% to trade 0.7% lower, in line with the gloom in Europe as well as Wall Street. In Argentina, President Mauricio Macri announced a tax incentive proposal aimed at boosting employment among young people on Monday, in a bid to gain ground with voters ahead of general elections later this month. Macri's shock loss to main rival Alberto Fernandez in August resulted in an Argentine market crash as investors feared a return to populist rules under Fernandez. Key Latin American stock indexes and currencies at 1951 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 992.59 -0.16 MSCI LatAm 2611.93 -1.42 Brazil Bovespa 99888.99 -0.68 Mexico IPC 42626.85 -0.76 Chile IPSA 5041.19 -0.19 Argentina MerVal 30386.54 -1.792 Colombia IGBC 12882.06 -0.73 Currencies Latest Daily % change Brazil real 4.0950 0.19 Mexico peso 19.6271 -0.31 Chile peso 724.8 -0.97 Colombia peso 3451.99 -0.12 Argentina peso 57.8450 0.03 (interbank) (Reporting by Susan Mathew in Bengaluru Editing by Matthew Lewis)