EMERGING MARKETS-Latam assets head for weekly losses as rising Treasury yields weigh; Brazil inflation tops forecasts

By Utkarsh Hathi

Sept 25 (Reuters) - Most Latin American assets were on track for weekly losses as elevated Treasury yields, expectations for further Federal Reserve rate hikes and weaker commodity prices dented sentiment, while investors also digested Brazil's hotter-than-expected inflation figures.

Oil prices eased 1.2% as traders assessed prospects of talks resuming between the US and Iran after a report that negotiators from both countries were exploring a phased path to reopen the Strait of Hormuz and lift Washington's economic blockade of Tehran. O/R

Still, with crude prices still trading near $105 per barrel, fears of persistent price pressures and a resilient US economy has pushed 30 year Treasury yields back to multi-decade highs.

Elevated Treasury yields and expectations of further Federal Reserve interest rate hike has strengthened the dollar recently, putting the regional assets under pressure.

"The bond market is telling us that September's hike is not one and done or one and pause," said Richard Reyle, chief investment officer, Questar Capital Partners.

MSCI's index tracking Latin American equities .MILA00000PUS shed 0.9%, while its currency equivalent .MILA00000CUS slipped 0.5%.

Equities in the region have lagged behind the broader emerging market stocks .MSCIEF, reflecting their limited exposure to AI-linked stocks. Global equity funds attracted the most inflows since early July in the week to September 25 on AI optimism, LSEG Lipeer data showed.

BRAZIL INFLATION EXCEEDS FORECASTS

Consumer prices in Brazil for the month through the mid-September accelerated more than expected, data showed on Friday. Annual inflation in the period reached 4.47%, above 4.3% anticipated by economists polled by Reuters.

The central bank of Brazil delivered a fifth consecutive rate cut last week and on Thursday projected inflation close to its 3% target at the policy horizon for its next rates decision.

"We continue to expect Copom to proceed cautiously with further easing. The firmer underlying readings strengthen the case for maintaining a gradual pace," said Andres Abadia, chief LatAm economist, Pantheon Macroeconomics.

The data comes into focus ahead of the presidential election, with voting to take place on October 4. President Luiz Inacio Lula da Silva is maintaining a thin lead over Senator Flavio Bolsonaro, Datafolha poll showed on Friday.

The real declined 0.2%, while the benchmark stock index Ibovespa .BVSP fell 0.8%.

Elsewhere, the Mexican peso slipped 0.3% and was heading for its biggest weekly fall since March. Stocks in Mexico .MXX gained 0.3%.

Bucking the trend, Colombia's peso rose 0.9% and was on track its first gain in two weeks.

Key Latin American stock indexes and currencies at 14:14 GMT