Fed rate hike bets hit Latam assets; Brazil's real jumps



* S&P cuts China 2022 GDP forecast, says EM growth to slow

* Brazil's real recovers from more than four-month lows

* Other Latam currencies slip as dollar gains strength (Updates prices)

By Susan Mathew

June 29 (Reuters) - Most Latin American stocks and currencies fell on Wednesday, with Chile's peso reaching another record low, as risk sentiment was hit by hawkish comments from U.S. Federal Reserve policymakers.

One outlier was Brazil's real BRBY , which rose 1.2% to recover from over four-month lows, as the market weathers volatility ahead of elections in October.

Fed chair Jerome Powell on Wednesday stuck to the central bank's hawkish stance, citing surging inflation as a bigger risk than slowing growth. This followed hawkish comments from Fed policymakers pushing for big and faster interest rate hikes, denting risk appetite and lifting the dollar.

"Emerging markets and commodities could stay under pressure if the (dollar) stays bouncy," said AJ Bell Investment Director Russ Mould.

"Many emerging nations borrow in dollars, and weakness in their currency relative to the American one makes it more expensive to pay the coupons and eventually repay the original loans."

Chile's peso CLP= fell 1.3% to a fresh record low as copper prices remained subdued at multi-month lows. The Colombian peso COP= lost 0.5%, while Mexico's peso MXN= was flat.

Fears that aggressive central bank tightening will push economies into recession have gripped markets this year. MSCI's index of emerging market shares .MSCIEF is on course for its biggest quarterly drop since a coronavirus-driven rout in the first quarter of 2020, and its worst first half since at least 2008.

Emerging market currencies .MIEM0000CUS are on track for their weakest first-half performance since 2020.

Looking ahead, emerging market economies will slow in the second half of this year amid high inflation, ratings agency S&P said, cutting GDP growth prediction for China to 3.3%, from 4.2% in May.

Adding to woes, COVID-19 cases in the Americas rose about 14% last week from the previous week, the Pan American Health Organization said on Wednesday. South America was the worst affected, with the COVID death rate up 32.8% from previous week, it said.

Tracking a choppy session on Wall Street, Latam bourses declined, with Colombia's main index .COLCAP down 2.0% and Brazil's Bovespa index .BVSP losing 0.9%

Key Latin American stock indexes and currencies at 1906 GMT: Stock indexes

Latest

Daily %

change MSCI Emerging Markets

1012.83

-1.67 .MSCIEF

MSCI LatAm

2080.49

-0.76 .MILA00000PUS

Brazil Bovespa

99673.28

-0.91 .BVSP

Mexico IPC

48335.26

-0.21 .MXX

Chile IPSA

4997.76

-0.17 .SPIPSA

Argentina MerVal

87536.00 -0.747 .MERV

Colombia COLCAP

1354.10

-1.95 .COLCAP

Currencies

Latest

Daily %

change Brazil real

5.2019

1.23 BRBY

Mexico peso

20.1205

0.01 MXN=D2

Chile peso

922.4

-1.28 CLP=CL

Colombia peso COP=

4107.6

-0.51 Argentina peso

125.0400

-0.13 (interbank) ARS=RASL


Reporting by Susan Mathew in Bengaluru; Editing by Jane Merriman and Lisa Shumaker


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