EMERGING MARKETS-LatAm assets mixed as rising dollar, yields offset metals support

By Utkarsh Hathi and Mehnaz Yasmin

Sept 29 (Reuters) - Latin American assets were mixed on Tuesday, as a stronger US dollar and rising Treasury yields dampened risk appetite as the Iran conflict showed no signs of easing, while investors awaited economic data and central bank decisions in the region.

Brent crude futures retreated 2.5%, surrendering early gains, after Saudi Arabia resumed loading oil from its Red Sea port of Yanbu, easing immediate concerns over energy supplies. Still, prices remained over $100 a barrel. O/R

Elevated oil prices have been spurring inflation concerns in the global economy, pushing up yields on major government bonds and the US dollar index , which held firm at a two-month high.

MSCI's index tracking Latin American currencies .MILA00000CUS edged 0.2% lower to its lowest since July 9, while its stocks equivalent .MILA00000PUS gained 0.1%.

Brazilian mining giant Vale VALE3.SA fell 2.3%, pressured by weaker iron ore prices, while energy firm Petrobras reversed declines to trade muted.

However, a 1.3% gain in lender Itau Unibanco helped the benchmark Ibovespa index .BVSP stay afloat, while the high-yielding real was muted after sharp losses in the previous session.

Loan defaults in the region's largest economy hit a record high in August, central bank data showed on Tuesday.

Separately, the government posted a primary deficit of 13.585 billion reais in August, narrower than the 14.40 billion reais expected by economists in a Reuters poll.

Concerns over Brazil's public finances and rising living costs remain in focus ahead of Sunday's first-round voting for the presidential election, with incumbent President Luiz Inacio Lula da Silva in a tight race with Senator Flavio Bolsonaro.

"If Brazil can show a focus on reining in that spending, under either a Bolsonaro or a Lula victory, it would be a welcome by the market," said Rohit Chopra, portfolio manager at Lazard Asset Management.

Fiscal concerns are also intensifying in Colombia, where sources said authorities have held talks with the International Monetary Fund in recent weeks on possible financing. The country's fiscal challenges have deepened following the recent earthquake.

"(The) IMF engagement is being read by market participants as a credibility-seeking step by the new administration, and the reception so far is cautious. Global investors will reward the talks only if talks produce concrete measures with external accountability," said Illia Kyslytskyi, portfolio manager at Singapore's Yaru Investments.

"The central bank decision is the next test, and a hawkish signal would help the carry case reassert itself."

The Colombian peso rose 1.3%. The currency has given up some of its gains in recent weeks, which were driven by strong momentum following President Abelardo De La Espriella's election victory in June.

Investors are also awaiting the Colombian central bank's rate decision later this week, with policymakers expected to leave borrowing costs unchanged.

The Mexican peso was subdued after hitting a six-month low in the previous session, while its stocks .MXX gained 0.3%.

Peru's benchmark stock index .MXNUAMPESCPGPE was flat, despite gold prices rebounding from seven-week lows.

Key Latin American stock indexes and currencies at 1955 GMT: