EMERGING MARKETS-Hot US data knocks LatAm currencies; Chile's peso leads slide

By Pranav Kashyap and Sukriti Gupta

Aug 14 (Reuters) - Latin American currencies fell on Thursday, led by Chile’s peso, after stronger-than-expected U.S. producer price data tempered expectations for a jumbo Federal Reserve rate cut next month.

An index tracking Latin American currencies .MILA00000CUS slipped 0.7%, pressured by a gaining dollar index =USD, while a regional stocks gauge .MILA00000PUS slipped 1.1%. Both were on track for their worst day in more than two weeks.

U.S. producer prices rose 3.3% in July, above the 2.5% consensus of economists polled by Reuters. Traders quickly scrapped budding bets on a half‑point Fed cut next month, while continuing to price a 25-basis-point move.

"The reaction after the last CPI print was a rich pricing in global equities, which is a clear path for a market that was getting enthusiastic and pondering about the possibility of a 50 bps cut," said Alejandro Cuadrado, global head of FX and Latam strategy at BBVA.

"With the PPI, we got a bit of a reality check... there is an impact of tariffs."

Chile's peso CLP= was down 1.4%, poised for its biggest single day percentage drop in nearly three weeks, with weaker copper prices also weighing on sentiment. Stocks in Santiago .SPIPSA, were flat but hovered near a record high touched in the previous session.

Mexico's peso MXN= eased nearly 1% to a one-week low, while the country's benchmark index .MXX lost 0.5%.

The Brazilian real BRL= slipped 0.3%, while the country's stock index .BVSP was little changed. Fresh data showed services activity in Brazil grew 2.8% in June on an annual basis.

Brazil faces some of the highest U.S. tariff rates, complicating the central bank’s path to monetary policy easing as domestic inflation slows.

Reuters reported that Congressman Eduardo Bolsonaro said Brazil could face additional U.S. tariffs due to legal action against his father, former President Jair Bolsonaro.

The Argentine peso ARS= firmed 1.2%, but stocks in Buenos Aires .MERV slid to a near three-week low, down 4.5%.

Colombia's peso COP= declined 0.4%, while stocks .COLCAP advanced 0.9%, tracking rising oil prices.

Peruvian sol PEN= dipped 0.6% in low volumes ahead of a local central bank decision, where rates are expected to kept o hold rates.

In Asia, India's bond yields logged their steepest decline in three months after S&P Global Ratings upgraded the country's long-term sovereign credit rating to "BBB" from "BBB-".

"We view this rating upgrade as unambiguously positive... this should boost sentiment and potentially lower risk premia and borrowing costs in the (Indian) economy," said analysts at J.P.Morgan.

Broader emerging-market sentiment may hinge on an upcoming summit between U.S. President Donald Trump and Russia’s Vladimir Putin.

Trump has warned of "severe consequences" if Putin rejects a Ukraine deal, then signaled a fast follow‑up with Zelenskiy, easing worries about Kyiv being sidelined.

Ukraine's dollar bonds rose more than 1 cent on the dollar.

Key Latin American stock indexes and currencies: