EMERGING MARKETS-Latam FX slightly lower as US tariff rhetoric jolts sentiment

By Shashwat Chauhan

March 13 (Reuters) - Most Latin American currencies traded in a flat-to-lower band on Thursday, as jitters remained about U.S. President Donald Trump's tariff threats and investors eyed fresh U.S. data amid growing concerns around an American economic slowdown.

In the latest twist of the tariff saga, Trump threatened to slap a 200% tariff on all wines and other alcoholic products coming out of Europe if the European Union does not scrap its planned tax on American whiskey.

Earlier this week, U.S. Commerce Secretary Howard Lutnick had said nothing would stop Trump's expanded 25% tariffs on steel and aluminum until U.S. domestic production is strengthened, and that Trump will add copper to his trade protections.

In the midst of the uncertainty, Brazil's real BRL= was the worst hit, down 0.2%. Chile's peso CLP= also weakened 0.6% though in light volumes.

The Mexican peso MXN= which has been front and center in the whiplash of tariff uncertainty recently, was last up 0.5% to trade at 20.0674 per dollar, its highest level so far this year.

Last week Trump had exempted goods from both Canada and Mexico under a North American trade pact for a month from the 25% tariffs that he had come into effect on March 4.

In the U.S., producer prices were unexpectedly unchanged in February, but the cooling trend is unlikely to be sustained as tariffs on imports are expected to raise prices of goods in the coming months.

"Clearly this is going to be a much more volatile year and it remains to be seen if all of the revolutionary changes to the economy and trans-Atlantic alliances will lead to a recession or if it will lead to higher growth rates in the future, but in the meantime a more cautious and risk-off posture is warranted," said Chris Zaccarelli, chief investment officer for Northlight Asset Management.

Traders expect more than 68 basis points of U.S. rate cuts by December, with the first cut this year likely in June, according to LSEG data.

Fears of an American economic slowdown have weighed on sentiment lately, with S&P Global Ratings researchers saying that if Trump's trade policies hit U.S. growth, Latin American economies could suffer because of their strong "trade linkages" to the United States.

MSCI's index for Latin American stocks .MILA00000PUS advanced 1%, with shares in Chile .SPIPSA leading gains.

Latin American equities have broadly fared better than their U.S. counterparts so far this month, with the MSCI gauge up more than 1% this month while the S&P 500 .SPX briefly flirted with slipping into a correction.

Later in the day, Peru's central bank is widely anticipated to hold its interest rate steady at 4.75%.

Key Latin American stock indexes and currencies: