*

Interest-rate increase is on table - Brazil central bank

director

*

Azul shares fall after results

*

Chile expected to cut rates to 5.5% in September - poll

*

Peru copper output slides nearly 12% in June

*

Stocks flat, FX down 0.5%

(Updated at 4:03 p.m. ET/ 2003 GMT)

By Ankika Biswas and Lisa Pauline Mattackal

Aug 12 (Reuters) - Latin American stocks and currencies

were largely mixed on Monday, as attention moved to key data

later in the week, including U.S. inflation data crucial in

determining the Federal Reserve's monetary policy path amid

recession fears.

The MSCI Latam stocks index was flat and the

currencies index was down 0.5%, easing from the

three-week intraday highs after last week's strong gains.

Investors awaited key U.S. inflation and retail sales data

later in the week for signals on growth in the world's largest

economy, as well as retail sales and industrial production

figures from China.

Emerging market assets have broadly recovered from last

week's sharp sell-off sparked by concerns about growth in both

the U.S. and China, and the week's upcoming data will test

whether risk sentiment has truly recovered.

Higher crude prices, factoring in potential disruptions to

Middle East supply, in part lifted currencies of Latin American

producers. Colombia's peso rose 0.5% against the dollar,

and Brazil's real was up 0.2%.

Brazil's central bank monetary policy director Gabriel

Galipolo said that an interest-rate increase is on the table.

"Unmoored medium-term inflation expectations reflect a

backdrop of an economy with no slack and policy premia - the

expectation that the fiscal targets will not be met and that the

fiscal and monetary authorities are inclined to accommodate

inflation above the target," said Goldman Sachs analysts.

Chile's peso rose 0.1% on a rally in copper prices,

but came off highs as the day progressed.

A poll showed the country's central bank is expected to

lower interest rates to 5.50% in September, a 25-basis-point cut

from the current 5.75%.

Peru's sol slipped 0.5% to a one-week low. Data

showed the world's third-largest copper producer's output of the

red metal fell 11.7% year-on-year in June.

Mexico's peso dropped 1.3% against the dollar, set to

snap a three-day gaining streak. The currency was among the

worst-hit in Latam during last week's selloff amid deepened

worries about slowing global growth and a massive unwinding of

yen-funded carry trades.

Bank of Mexico's governor Victoria Rodriguez told Reuters

that she expected a recent jump in headline inflation to be

short-lived and if that forecast turned out to be valid, further

rate cuts could come.

Meanwhile, Citigroup upgraded its stance on Mexican equities

to neutral, with the country's benchmark stock index flat

on the day.

On the equities front, Brazilian-listed shares of Azul

lost nearly 12% after the airline reduced its

estimate for 2024 core earnings while bumping up its leverage

forecast.

Elsewhere in Latam, a poll showed Argentina's inflation is

expected to have slowed to around 4% in July after speeding up

in June.

Since the inauguration of libertarian President Javier Milei

in December, inflation steadily slowed from 25.5% that month to

4.2% in May but ticked up to 4.6% in June.

Key Latin American stock indexes and currencies as of 2003

GMT:

Equities Latest Daily %

change

MSCI Emerging Markets 1069.19 0.54

MSCI LatAm 2248.77 -0.05

Brazil Bovespa 131286.15 0.51

Mexico IPC 53057.88 0.01

Chile IPSA 6338.8 0.28

Argentina Merval 1579741.7 -0.262

8

Colombia COLCAP 1333.61 1.77

Currencies Latest Daily %

change

Brazil real 5.4977 0.17

Mexico peso 19.0695 -1.3

Chile peso 931.5 0.06

Colombia peso 4048.89 0.49

Peru sol 3.7305 -0.5

Argentina peso (interbank) 938.5 -0.159829515

Argentina peso (parallel) 1335 1.498127341