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EMERGING MARKETS-Latam FX falls, energy reform fears trip up Mexico's peso

    * Mexican peso eyes worst day in nearly a month, down 1%
    * U.S. inflation spikes, risk assets under pressure
    * Brazil's service sector activity surges in May

    By Ambar Warrick
    July 13 (Reuters) - Latin American currencies came under
pressure from a spike in U.S. inflation on Tuesday as investors
feared monetary policy tightening by the Federal Reserve, while
Mexico's peso tumbled on concerns over more government
interference in the energy sector. 
    MSCI's index of Latin American currencies
fell 0.1% in early trade after data showed U.S. consumer prices
shot up at their highest rate in 13 years in June. The dollar
and Treasury yields both rose after the data.
    A sustained spike in inflation could push prices above the
Fed's target inflation range, and compel the U.S. central bank
to tighten policy earlier than anticipated. 
    "It came in very hot, much hotter, so it is going to be
difficult for the Fed or any of the talking heads to try to talk
it away as transitory ... it is significantly stronger, and that
plays right into the ongoing inflationary concerns," said Ken
Polcari, managing partner at Kace Capital Advisors.
   
    Mexico's peso led the losses across Latin America,
sinking as much as 1% and eyeing its worst day in nearly a
month.
    Mexican President Andres Manuel Lopez Obrador said he plans
to send a constitutional reform to Congress to protect
public-sector interests over private companies in the
electricity market.
    Lopez Obrador's stance on the country's energy market has
been widely opposed by independent power firms and investors on
the grounds that it would hurt competition.
    Recent volatility in the oil market also weighed on the
peso. The International Energy Agency warned that while the oil
market could see tighter supply due to an OPEC+ dispute, there
remains a risk of a dash for market share.
    Brazil's real fell 0.2%, now on track to lose ground
in nine of the past 10 sessions as corruption scandals in Latin
America's largest economy sapped appetite for the currency.
    Waning iron ore imports in China, the largest exporter of
the steelmaking ingredient from Brazil, could also hurt the real
this year.
    But economic growth in Brazil has been wholly positive this
year, as more of the country emerges from COVID-19 lockdowns. 
    Data on Tuesday showed services activity in Brazil grew
23.0% in May from last year.
    In an update to Argentina's debt woes, the International
Monetary Fund said progress was being made in talks over the
roughly $45 billion owed to the Fund.
    Broader emerging market currencies also retreated after the
U.S. inflation data, with MSCI's index falling
0.1%.
    Latin American stocks fell in early trade,
tracking losses on Wall Street. 
    Key Latin American stock indexes and currencies:
    
                              Latest    Daily % change
 MSCI Emerging Markets         1338.11             0.85
                                        
 MSCI LatAm                    2556.97             0.01
                                        
 Brazil Bovespa              127194.78            -0.31
                                        
 Mexico IPC                   49890.80              0.2
                                        
 Chile IPSA                    4209.63            -0.79
                                        
 Argentina MerVal                    -                -
                                        
 Colombia COLCAP               1297.41            -0.08 Currencies             Latest    Daily % change
 Brazil real                    5.1829            -0.19
                                        
 Mexico peso                   19.9908            -0.73
                                        
 Chile peso                     744.28            -0.15
                                        
 Colombia peso                 3821.51            -0.09
 Peru sol                       3.9605            -0.17
                                        
 Argentina peso                96.1200            -0.02
 (interbank)                            
                                        
 
    
 (Reporting by Ambar Warrick
Editing by Paul Simao)
  
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