EMERGING MARKETS-Latin American assets slip amid mounting concerns about US debt

By Nikhil Sharma

May 21 (Reuters) - Most Latin American assets fell on Wednesday, pressured by concerns over the growing U.S. fiscal debt, while a lack of any new developments on U.S. trade deals further dampened the mood.

A gauge for regional equities .MILA00000PUS fell 0.6% in conjunction with global stocks, while the MSCI regional currencies index .MILA00000CUS was little changed.

The dollar index =USD fell as investors grew concerned about U.S. President Donald Trump's sweeping tax bill, which could further inflate the country's debt.

Wall Street's main indexes fell and long-dated Treasury yields jumped on Wednesday ahead of a debate around Trump's tax cut bill. .N

Analysts estimate Trump's tax bill would add $3 trillion to $5 trillion to the fiscal debt.

"There are speculations about the U.S. budget and the fiscal trajectory and some potential uncertainty in terms of higher U.S. yields and global yields," said Jon Harrison, managing director of EM Macro Strategy at TS Lombard.

"That has implications for the central banks in emerging markets and their willingness to cut rates."

Investors were also on the lookout for more trade deals out of the U.S. before the 90-day tariff pause comes to an end, with hopes that more agreements could cushion economies from the impact of Trump's tariffs.

"We're in a pause in terms of the tariff negotiations... There hasn't been much attention paid to 20 other things that might affect Latam or other emerging markets," TS Lombard's Harrison added.

Mexico's peso MXN= fell 0.4%, the worst-performing currency for the day.

Meanwhile, stronger-than-expected retail sales figures did little to boost investor sentiment. Data showed Mexican retail sales rose 4.3% in March compared with the same month a year earlier, beating expectations of a 2.2% increase.

A Reuters poll showed that the country's headline inflation rate likely accelerated in the first half of May, above the central bank's official target.

The local stock index .MXX jumped 0.5%, boosted by bottler FEMSA FEMSAUBD.MX and mining company Grupo Mexico GMEXICOB.MX.

Brazil's real BRL= was a bright spot, firming 0.3% against the dollar, buttressed by resilient iron prices - the country's biggest export item.

Conversely, the local benchmark stock index .BVSP slipped 1.2%, with lender Itau Unibanco ITUB4.SA and power group Eletrobras ELET3.SA declining over 1% each.

Other currencies, such as the Colombian peso COP=, were flat and the Peruvian sol PEN= up 0.5%.

Chilean markets were closed in observance of Navy Day.

In other emerging markets, South Africa's rand ZAR=D3 was up about 0.1% against the dollar after the new budget projected a wider deficit, and a higher debt.

The currency had hit a more than 5-month high earlier. A meeting between President Cyril Ramaphosa and U.S. President Trump on Wednesday in Washington will be closely watched.

The country's main stock index .JTOPI rose 0.9% after April inflation came in at 2.8% year on year, below the central bank's 3% to 6% target range.

Elsewhere, Israel's international bonds fell after reports of a potential Israeli strike in Iranian nuclear facilities sparked worries about a supply disruption in the Middle East. O/R

Bonds maturing in 2050 US46513JB429=TE fell to their lowest in more than a year.

Key Latin American stock indexes and currencies: