EMERGING MARKETS-Latam FX clocks strongest weekly gain in over three months

* Peru cbank keeps benchmark interest unchanged * Brazil retail sales down 1.0% in May from April * Mexico not interested in Citigroup’s local retail unit (Updated 1938 GMT) By Ankika Biswas July 14 (Reuters) – Latin American currencies gained on Friday at the end of a week packed with multiple economic readings and optimism the U.S. rate-hiking cycle would end earlier than previously expected. Bets on the U.S. Federal Reserve approaching the end of rate hikes following softening inflation data has set the dollar on track for its biggest weekly decline since November. The MSCI index for Latam currencies rose 1.9% for the week, its strongest weekly gain since late March. The Peruvian sol rose 0.5% after Peru’s central bank kept its benchmark interest rate unchanged for a sixth month on Thursday, while projecting the downward trend in inflation would continue over the coming months and be close to target by year-end. “The case for the bank to reduce pressure on the economy will continue to grow, and rapidly,” said Andres Abadia, chief LatAm economist at Pantheon Macroeconomics, who anticipates rate cuts from September or October. “The risk of El Nino over the coming months is increasing, which could easily limit the downshift in inflation via higher food prices, and delay the start of the easing cycle to late Q4.” Lower copper prices also pressured top exporter Chile’s peso by 0.5%. Data showed Brazil’s retail sales fell in May and missed expectations, as half of the segments presented a decline for the month. The real was flat. Brazil’s economic team predicts the central bank has room to cut its benchmark Selic rate by more than 25 basis points at its next meeting. The country’s president has asked for a cut in the key rate from a six-year high of 13.75%, which is considered to be hindering economic growth. “The upshot is the BCB (Brazil’s central bank) will proceed gradually and cut rates only marginally … the economy will not get a meaningful reprieve from high borrowing costs,” BCA Research analysts wrote. Traders also awaited Colombia’s May industrial output and retail sales data later in the day. The peso was flat. Lower crude oil prices dented Mexico’s peso by 0.7%. Meanwhile, the Mexican government said it is no longer interested in purchasing Citigroup’s local retail arm, known as Banamex, adding that the U.S. bank “chose a different path” for its unit. The MSCI index for Latam stocks slipped 0.5%, pulled down by Brazil and Mexican equities. Key Latin American stock indexes and currencies at 1938 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1027.86 0.72 MSCI LatAm 2474.85 -0.53 Brazil Bovespa 117592.6 -1.4 5 Mexico IPC 53756.80 -0.9 Chile IPSA 6110.40 0.8 Argentina MerVal 443903.7 -1.604 0 Colombia COLCAP 1158.32 -1.28 Currencies Latest Daily % change Brazil real 4.7909 -0.05 Mexico peso 16.7222 0.69 Chile peso 814.2 -0.54 Colombia peso 4056.5 1.11 Peru sol 3.5449 0.46 Argentina peso (interbank) 265.0000 -0.23 Argentina peso (parallel) 517 -0.97 (Reporting by Ankika Biswas and Shreyashi Sanyal in Bengaluru; Additional reporting by Bansari Mayur Kamdar; editing by Barbara Lewis and Josie Kao)