*

MSCI Latam stocks index off 2.8%, EM stocks down 8%

*

Mexico would like to avoid imposing reciprocal tariffs on

U.S.

*

Trump threatens additional tariffs on China

*

Frontier market hard currency bonds drop

(Updates through later afternoon trade)

By Johann M Cherian and Lisa Pauline Mattackal

April 7 (Reuters) - Emerging market currencies and bonds

joined a global risk-asset selloff on Monday, with an index

tracking stocks recording its worst day since the 2008 financial

crisis, on worries that U.S. President Donald Trump's firm

stance on sweeping tariffs could damage the global economy.

A global trade war escalated further, as Trump threatened to

impose an additional 50% tariff on Chinese goods starting on

April 9, and the European Union proposed counter tariffs on the

U.S.

MSCI's emerging market stock index slumped 8%, led

by a steep selloff in heavily weighted Chinese equities. The

offshore yuan fell 0.7%.

An index of Latin American stocks fell 2.8%,

down over 9% over the last two sessions, while a gauge of the

region's currencies lost 1.3%.

Meanwhile, dollar bonds issued by emerging market countries

fell broadly, with debt from smaller, riskier, markets such as

Pakistan, Angola and El Salvador seeing some of the steepest

losses.

Volatility was high as investors digested a barrage of

headlines, including the White House denying a report that Trump

is considering a 90-day pause in tariffs for all countries

except China, which had briefly caused markets to pare losses.

Most global risk assets have sold off sharply in the days

following Trump's April 2 reciprocal tariff announcement, with

focus now on how other countries will respond and how

negotiations with the U.S. unfold.

"Trump's waiting for the other sides to come up with a plan

... one (possible) route is that we see Trump focus on those

(countries) that are retaliating first, so then before we get

anything good, we get something worse," said Benjamin Ford,

strategist at Macro Hive.

Mexico's President Claudia Sheinbaum said her government

would like to avoid imposing reciprocal tariffs on the U.S.,

though she said it could not be ruled out. Mexico's peso

lost 1.3%.

Latin America's commodity-sensitive stocks and currencies

lost ground as energy and metal prices were hit on worries about

a slowing economy depressing demand.

Still, assets in Latin America have witnessed more moderate

declines as U.S. tariffs on the region have been lower than

those imposed on other emerging market economies.

"While there are no outright winners in a trade war, Latin

America appears relatively insulated," said Alejo Czerwonko,

CIO, emerging markets Americas, UBS Global Wealth Management.

Stocks of Latin American commodity companies fell, with

Brazil's Petrobras down 3.7%.

Colombia's peso led regional currency losses, down

2.5% at an over three-month low.

Chile's central bank said the only plausible option at its

March meeting was keeping the benchmark interest rate on hold at

5% due to risks facing the inflationary outlook.

HIGHLIGHTS

** Trump leaves emerging market central banks with no clean

choices

** China sovereign fund steps in to support stocks plunging

on trade war

** Argentina's zombie mortgage market is coming back to life

** Poland's bourse halts trading on all markets

Key Latin American stock indexes and currencies at 2000 GMT:

Equities Latest Daily %

change

MSCI Emerging Markets 1000.85 -7.98

MSCI LatAm 1925.18 -2.84

Brazil Bovespa 125437.48 -1.43

Mexico IPC 50525.09 -1.8

Chile IPSA 7252.25 -3.36

Argentina Merval 2027481.5 -3.811

6

Colombia COLCAP 1609.66 -0.67

Currencies Latest Daily %

change

Brazil real 5.908 -1.12

Mexico peso 20.678 -1.28

Chile peso 988.85 -0.96

Colombia peso 4382.6 -2.45

Peru sol 3.7143 -1.03

Argentina peso (interbank) 1075 -0.116279

07

Argentina peso (parallel) 1325 -1.132075

472

(Reporting by Johann M Cherian in Bengaluru; Editing by

Alistair Bell and Shinjini Ganguli)