EMERGING MARKETS-LatAm currencies firm on expectations of low U.S. rates

SAO PAULO, Oct 4 (Reuters) - Most Latin American currencies strengthened on Thursday on expectations that U.S. President Donald Trump will appoint a less hawkish head of the Federal Reserve than expected. Politico reported on Tuesday that Treasury Secretary Steven Mnuchin favors the appointment of Fed Governor Jerome Powell as Fed chair over former Governor Kevin Warsh, who is seen as more hawkish. The report fueled expectations that U.S. interest rates will rise slowly in coming months as inflation remains stubbornly below the U.S. central bank's 2 percent target Currencies from Brazil, Chile and Colombia firmed between 0.2 percent and 0.7 percent, supported by the prospect of stronger demand for high-yielding assets. That perception lost some steam, however, following stronger-than-expected service-sector figures, which boosted the likelihood that the Fed will hike rates in December.

Brazil's benchmark Bovespa stock index seesawed after jumping the most since August to an all-time high the day before. Still, analysts expect Brazilian stocks to continue rising as Latin America's largest economy emerges from its deepest recession in a century. "Yesterday's advance may invite some profit-taking today, but the long-term trend still points upward," Modalmais chief economist Alvaro Bandeira said. Shares in state-controlled oil company Petróleo Brasileiro SA slipped 1 percent as investors booked profits from the previous day's rally. The stock rose sharply on Wednesday after a minister said a privatization would be feasible in the long run.

Key Latin American stock indexes and currencies at 1720 GMT:

Stock indexes daily % YTD % change change


MSCI Emerging Markets 1102.93 0.54 27.23 MSCI LatAm 3006.29 0.54 27.75 Brazil Bovespa 76868.99 0.14 27.63 Mexico S&P/BVM IPC 50706.34 0.18 11.09 Chile IPSA 5439.40 0.36 31.03 Chile IGPA 27193.84 0.39 31.15 Argentina MerVal 26422.21 -0.94 56.18 Colombia IGBC 11059.06 -0.58 9.19 Venezuela IBC 539053.69 4.76 1600.20 Currencies daily % YTD % change change


Brazil real 3.1237 0.69 4.02 Mexico peso 18.2320 -0.10 13.78 Chile peso 631.05 0.18 6.28 Colombia peso 2943.78 0.25 1.96 Peru sol 3.256 0.18 4.85 Argentina peso (interbank) 17.3500 0.37 -8.50 Argentina peso (parallel) 17.82 0.45 -5.61

(Reporting by Bruno Federowski; Editing by Jonathan Oatis)