EMERGING MARKETS-Currencies firm against steady dollar; Brazil's real rebounds

By Susan Mathew

March 16 (Reuters) - Emerging market currencies shook off initial sluggishness to gain on Tuesday against a dollar steadying ahead of the U.S. Federal Reserve's policy decision.

Russia's rouble RUB= touched its highest since July despite declining oil prices, while Turkey's lira TRY= firmed half a percent.

In Latin America, Brazil's real BRBY, BRL= rose 0.9% after sliding more than 1% on Monday. Locally, eyes were on the central bank's rate meeting on Wednesday when it was expected to hike rates to contain inflation.

Globally, focus was on the Fed's policy decision, due ahead of Brazil's verdict on Wednesday. The Fed has had interest rates pinned near zero for the past year, and has promised to keep them there until the economy reaches full employment, and inflation has hit a sustained 2%. nL1N2L82OT

The dollar steadied as investors awaited the Fed's signal to make further investment choices. Riskier currencies such as those of emerging markets thrive on U.S. interest rates remaining low as they benefit from the interest rate differential that increases their appeal for carry trade.

Mexico's peso MXN= hit a two-week high, while Colombia's currency COP= recovered from its worst day in four months.

Main stock indexes in Latam were muted in early trade, compared with a 0.7% rise for a broader index of EM stocks .MSCIEF.

"We still expect EM equities to benefit from a global cyclical upswing, supported by a stable U.S. dollar," said Jean Boivin at BlackRock, adding the asset manager was overweight on emerging equities and had used recent dips to add to its exposure.

"The commodity price rally should also help resource-rich EM economies, in our view."

Iron ore miner Vale VALE3.SA was the top boost on Brazil's Bovespa index .BVSP as iron ore prices surged more than 5%. IRONORE/

Peru's sol PEN= lagged peers, inching lower.

The country's populist presidential front-runner Yonhy Lescano plans to renegotiate a fairer distribution of mining wealth if elected to lead the world's No. 2 copper producer, and also allow imports of cheaper natural gas, he told Reuters less than a month before the April ballot.

In Argentina, Economy Minister Martin Guzman said the depreciation of the Argentine peso ARS=RASL will slow over the months ahead, leading to a slowdown in inflation. Meanwhile, the government said Argentina's industrial output should grow more than 6% this year versus 2020. nL1N2LD2Y7nL1N2LD2Y7

Key Latin American stock indexes and currencies at 1330 GMT:

Stock indexes	Latest	Daily % change
MSCI Emerging Markets .MSCIEF	1349.95	0.72
MSCI LatAm .MILA00000PUS	2313.84	0.8
Brazil Bovespa .BVSP	114911.96	0.05
Mexico IPC .MXX	-	-
Chile IPSA .SPIPSA	4912.64	-0.02
Argentina MerVal .MERV	-	-
Colombia COLCAP .COLCAP	-	-
Currencies	Latest	Daily % change
Brazil real BRBY	5.5845	0.95
Mexico peso MXN=D2	20.6270	0.02
Chile peso CLP=CL	722.4	0.04
Colombia peso COP=	3540.8	0.37
Peru sol PEN=PE	3.6947	0.07
Argentina peso (interbank) ARS=RASL	91.1300	-0.07

(Reporting by Susan Mathew in Bengaluru
Editing by Mark Heinrich)

((susan.mathew@thomsonreuters.com; +91-80-6287-2704;))