EMERGING MARKETS-Most Latam currencies fall, set for monthly losses as dollar firms on hope of smaller Fed cuts

Updated at 1950 GMT

By Shashwat Chauhan and Lisa Pauline Mattackal

Aug 30 (Reuters) - Most Latin American currencies slipped on Friday, as the U.S. dollar firmed after data supported the likelihood of smaller interest rate cuts by the Federal Reserve.

The dollar index =USD rose after data showed U.S. consumer spending rose in July, while the personal consumption expenditures (PCE) price index - the Fed's preferred inflation gauge - rose 0.2% last month.

The data saw traders further trim bets on a larger 50 basis point interest rate cut from the Fed month, meaning pressure on emerging markets from a stronger dollar and elevated U.S. borrowing costs were likely to continue despite the Fed still being expected to cut rates by 25 bps.

"(U.S.)consumer spending remains very robust and this may make the Fed reluctant to move aggressively," analysts at ING said in a .

Most Latin American currencies slipped against the dollar, with Brazil's real BRL= down 0.2%, Chile's peso CLP= slipping 0.1% and Colombia's peso COP= easing 1.6% to a four-week low.

The real pared some early losses after the central bank sold $765 million in a surprise swap auction, after previously selling the entire $1.5 billion it offered in a spot auction.

Mexico's peso MXN=, however, bucked the trend to rise 0.8%. Still, it was set for a close to 6% monthly drop - its third monthly decline - as worries about domestic judicial reforms and expectation of dovish central bank policy saw investors grow less positive on the currency.

The peso's gains kept MSCI's index for Latin American currencies .MILA00000CUS supported, up 0.3%, while a gauge for stocks .MILA00000PUS rose 0.2%.

Amongst equities, Brazil's Bovespa .BVSP dipped 0.4% and Mexican stocks .MXX slipped 0.5%, though Colombia's Colcap .COLCAP gained 2% and Argentina's Merval .MERV jumped 3.5% to an over one-month high.

The currency index was set to lose 0.6% for the month. The stocks index was on track to gain 1.6%, slightly outperforming MSCI's gauge of global emerging market stocks' .MSCIEF 1.3% rise.

August closes a turbulent month for global risk assets, which tumbled early in the month on worries about U.S. economic growth and an unwinding of yen currency carry trades.

High-yielding Latin American currencies saw sharp declines, but have since recovered some ground as positive U.S. data and policymaker comments cemented expectations for the Fed's first interest rate cut.

Still, most Latin American currencies were set for monthly losses against the dollar. The greenback, however, weakened about 3% against Chile's peso and 0.1% against the real on a monthly basis.

Brazil's central bank chief Roberto Campos Neto said rate adjustments would be "gradual."

Markets in Peru were shut for a public holiday.

HIGHLIGHTS

** Brazil's jobless rate drops to 6.8% in quarter through July

** Chile's copper output, manufacturing production up in July

** Kenya's inflation rises slightly to 4.4% yr/yr in August

** Maldives bonds at record low after Fitch downgrade amid default concerns

Key Latin American stock indexes and currencies:

MSCI Emerging Markets .MSCIEF	1099.51	0.42
MSCI LatAm .MILA00000PUS	2240.71	0.16
Brazil Bovespa .BVSP	135454.44	-0.43
Mexico IPC .MXX	52861.28	-0.52
Chile IPSA .SPIPSA	6438.08	-0.16
Argentina Merval .MERV	1719464.93	3.573
Colombia COLCAP .COLCAP	1362.28	2.02
Currencies	Latest	Daily % change
Brazil real BRL=	5.6356	-0.16
Mexico peso MXN=	19.6847	0.76
Chile peso CLP=	913.42	-0.12
Colombia peso COP=	4178.5	-1.63
Peru sol PEN=	3.748	-0.21
Argentina peso (interbank) ARS=RASL	950.5	0
Argentina peso (parallel) ARSB=	1285	2.33463035

(Reporting by Shashwat Chauhan and Lisa Mattackal in Bengaluru; editing by Barbara Lewis and Jonathan Oatis)

((Shashwat.Chauhan@thomsonreuters.com;))