(Updates prices)

By Susan Mathew

July 5 (Reuters) - Emerging market currencies were battered on Tuesday as the dollar reigned supreme amid heightening recession fears, while Argentine assets recovered after the newly appointed economy minister promised fiscal responsibility and stability.

Argentina's Silvina Batakis quickly moved to calm markets about worries that the abrupt exit of her predecessor, Martin Guzman, would spark a shift towards populist policies and state spending.

The black market exchange rate, seen as a reflection of real investor sentiment in the currency, rose more than 1% to 257 per dollar, after sliding to around 280 to record lows on Monday.

"Batakis is more of an unknown to the investor community; however, her alignment with Kirchner makes us nervous that she could boost fiscal spending and disregard the IMF program," said Brendan McKenna, international economist with Wells Fargo Securities. He was referring to hard left Vice President Cristina Fernandez de Kirchner, a divisive but powerful figure who was a two-term president from 2007-2015 and commands a major support base.

"Any deviations from achieving fiscal balance and other reform items could see pressure build on the peso to the point where a 10% - 15% devaluation is needed to avoid another full-blown crisis."

The official peso ARS=RASL gave up another 0.2% on Tuesday.

Latam's leftward shift could see a drop in M&A and equity deals intensify through the end of the year, the region's bankers said, as Brazil goes through its presidential elections in October, where leftist former President Luiz Inacio Lula da Silva is ahead in opinion polls.

Meanwhile, broader risk sentiment took a hit after European gas prices surged on supply concerns amid strikes at a Norwegian oil and gas infrastructure, exacerbating fears over spiraling inflation and slowing economic growth.

MSCI's index of emerging market currencies .MIEM00000CUS hit 20-month lows, with falling copper prices as 9% plunge in Brent crude sent currencies of Chile CLP= and Colombia COP= to new lows.

Chile's peso slumped 2.3% to 950.52-a-dollar, while Colombia's currency COP= touched 4.275.50.

With safe-haven demand sending the dollar index up more than 1%, Mexico's peso MXN= slid 1.5%, while Brazil's real BRBY slumped 1.4% with to hit five-month lows. A less than expected rise in Brazil's May industrial output added to the gloom.

"Slowdown fears are now arguably the main driver of currencies globally, perhaps even more so than central bank interest rate expectations," said Matthew Ryan, head of market strategy at financial services firm Ebury.

Stocks in Latam also fell, with Mexico's IPC index .MXX sliding 1.5%, while Colombia's COLCAP index .COLCAP slumped 2.4% to over seven months lows.

Latin American stock indexes and currencies at 1905 GMT: Stock indexes

Latest

Daily %

change MSCI Emerging Markets

989.82

-0.3 .MSCIEF

MSCI LatAm

1980.23

-2.75 .MILA00000PUS

Brazil Bovespa

97744.11

-0.88 .BVSP

Mexico IPC

47329.30

-1.47 .MXX

Chile IPSA

4989.51

0.01 .SPIPSA

Argentina MerVal

91594.24

2.766 .MERV

Colombia COLCAP

1325.94

-2.36 .COLCAP

Currencies

Latest

Daily %

change Brazil real

5.3975

-1.37 BRBY

Mexico peso

20.5738

-1.53 MXN=D2

Chile peso

950.6

-2.52 CLP=CL

Colombia peso COP=

4270.6

-1.76 Peru sol

3.8502

-0.91 PEN=PE

Argentina peso

126.1800

-0.17 (interbank) ARS=RASL

Reporting by Susan Mathew in Bengaluru; Editing by Alistair Bell and Grant McCool