(Updated at 3:30pm ET/1930 GMT)

By Sruthi Shankar

March 19 (Reuters) - Gauges of both Latin American

currencies and stocks fell on Tuesday, with the Brazilian real

weakening past 5 per dollar for a second day as investors

awaited monetary policy news in Brazil, Mexico and the United

States.

The U.S. Federal Reserve is widely expected to keep interest

rates unchanged on Wednesday but more hawkish signals about the

timing and extent of policy easing this year could make

investors nervous.

Hotter-than-expected U.S. growth and inflation data this

year have led investors to reduce bets on the number of Fed rate

cuts this year, boosting the dollar.

MSCI's index of Latam currencies touched a two-week low in

early trading, before paring losses. The index was last down

0.1%.

"The U.S. data continue to come in mostly firmer and despite

(Fed Chair) Powell's recent dovish testimony before Congress,

most Fed officials remain very cautious about easing too soon,"

strategists at Brown Brother Harriman said.

"We believe that the current market easing expectations for

the Fed still need to adjust. When they do, the dollar should

gain further."

MSCI's index of Latin American stocks dipped

0.6%, set to fall for the fourth consecutive session.

The Brazilian real edged up 0.1% ahead of a

local rate decision on Wednesday where another 50 basis point

rate cut is expected. However, it remained around the 5 per

dollar level breached on Monday.

The Mexican peso was flat after touching its

strongest level in seven months last week. The Bank of Mexico's

interest rate stands at a historic high of 11.25%, and the

monetary authority is expected to ease interest rates when it

meets on Thursday.

"The peso remains extremely overvalued ... versus other EM

currencies and is vulnerable to a correction as interest rates

decline," Jon Harrison, managing director of EM macro strategy

at TS Lombard said.

Chile's central bank President Rosanna Costa said she

expects interest rates to keep falling if economic factors and

inflation remain stable. Chile's peso dropped 1.9% in

its worst session since October.

Stock markets in the region were mixed, with Brazil's

Bovespa rising 0.6% and Mexico's IPC index

falling 1%.

Magazine Luiza fell 6.7% after the Brazilian

retailer reported a 5.5% drop in quarterly net revenue, missing

analyst estimates.

Braskem ( BAK ) climbed 3.7% after the petrochemical

producer reported a quarterly net loss of 1.58 billion reais

($317 million), narrowing from the 1.71 billion reais loss a

year earlier.

Elsewhere in emerging markets, a group of Zambia's

international bondholders has signed a non-disclosure agreement

with the government to discuss a $3 billion debt restructuring

proposal, according to sources familiar with the situation.

Key Latin American stock indexes and currencies at 1930 GMT:

Latest Daily %

change

MSCI Emerging Markets 1028.10 -0.96

MSCI LatAm 2484.73 -0.58

Brazil Bovespa 127674.14 0.57

Mexico IPC 55642.69 -1.04

Chile IPSA 6416.61 -0.59

Argentina MerVal 1139030.75 1.325

Colombia COLCAP 1307.07 -0.01

Currencies Latest Daily %

change

Brazil real 5.0260 -0.02

Mexico peso 16.8153 0.06

Chile peso 966.1 -1.93

Colombia peso 3873.66 0.49

Peru sol 3.6918 -0.05

Argentina peso 853.0000 -0.06

(interbank)

Argentina peso 1010 1.49

(parallel)

(Reporting by Sruthi Shankar and Lisa Mattackal in Bengaluru;

editing by Barbara Lewis and Emelia Sithole-Matarise)