EMERGING MARKETS-LatAm markets fall on U.S. rate hike prospects after wage data

data@ SAO PAULO, Feb 2 (Reuters) - Latin American markets retreated on Friday after data showing U.S. job growth surged in January and wages increased, lifting expectations of faster U.S. interest rate hikes, which could dampen demand for risky assets. The robust employment report bolstered expectations of price pressures that could drive inflation back towards the official target. It underscored the strong momentum in the economy, raising the possibility that the Federal Reserve could be a bit more aggressive in raising interest rates this year. The U.S. central bank has forecast three rate increases this year after raising borrowing costs three times in 2017. Higher U.S. rates could lessen demand for risky assets, which typically offer higher yields. That perception drove widespread profit-taking on emerging markets, which had undergone a sharp rally in the first month of the year. The currencies of Brazil, Mexico, Chile and Colombia fell between 0.9 percent and 1.6 percent. Also curbing demand for Brazilian assets were concerns over an unpopular bill cutting social security spending, which investors see as key to fueling long-term economic growth. The pension bill, which is scheduled for a key vote in the lower house in the week of Feb. 19, still does not have enough support for congressional approval, the cabinet minister in charge of political affairs said on Thursday. "Local caution adds to risk aversion worldwide, bumping the dollar up against the Brazilian real," Spinelli brokerage trader José Amado said. Brazil's benchmark Bovespa stock index led the losses among Latin American stock markets, weighed down by blue-chips such as lender Itaú Unibanco Holding SA and Banco Bradesco SA and miner Vale SA. Shares of Embraer SA, however, soared as much as 9.3 percent on reports that Boeing Co has sought the Brazilian government's approval of a partnership with the planemaker that would create a new company focused on commercial aviation.

Key Latin American stock indexes and currencies at 1655 GMT:

Stock indexes daily % YTD %

change change Latest

MSCI Emerging Markets 1229.90 -1.5 7.79 MSCI LatAm 3144.58 -2.56 14.1 Brazil Bovespa 84187.36 -1.53 10.19 Mexico IPC 50433.63 -0.31 2.19 Chile IPSA 5814.99 -0.81 4.50 Chile IGPA 29251.62 -0.72 4.54 Argentina MerVal 32884.85 -5.07 9.38 Colombia IGBC 12210.00 -0.92 7.38 Currencies daily % YTD %

change change Latest

Brazil real 3.2181 -1.55 2.96 Mexico peso 18.5400 -1.03 6.25 Chile peso 602.5 -0.85 2.02 Colombia peso 2840.28 -1.64 4.99 Peru sol 3.217 -0.19 0.62 Argentina peso (interbank) 19.4950 -0.59 -4.59 Argentina peso (parallel) 19.88 0.25 -3.27

(Reporting by Bruno Federowski; Editing by Susan Thomas)