EMERGING MARKETS-Latam assets hit multi-week lows on US-Iran stalemate, Fed rate worries 

By Utkarsh Hathi

Sept 28 (Reuters) - Latin American currencies and stocks slid to multi-week lows on Monday, as a stalemate in US-Iran negotiations and expectations of higher Federal Reserve interest rates dampened sentiment.

Investors have grappled with fears of a prolonged disruption to energy supplies in recent weeks with the Middle East conflict showing no signs of resolution in its seventh month.

Brent crude prices gained 1.3% after US President Donald Trump rejected Iran's peace proposal to resolve the seven-month old conflict and reopen the Strait of Hormuz.

Adding to investor concerns, US Treasury yields remain elevated following Federal Reserve's interest rate hike earlier this month, with markets pricing in further hikes.

Higher Treasury yields draw investors toward dollar-denominated assets, putting pressure on Latin American assets.

"The dollar has emerged as the clear point of refuge for investors in the wake of the parallel sell off in
government bonds globally," said Matthew Ryan, head of market strategy at global financial services firm Ebury.

MSCI's index tracking Latin American currencies .MILA00000CUS slipped 0.1% to a two-month low, while its stocks equivalent .MILA0000PUS dropped 0.5% to more than a one-month low.

In Brazil focus will be on the first round of voting on October 4 for presidential elections. Brazilian President Luiz Inacio Lula da Silva and Senator Flavio Bolsonaro remain statistically tied in a simulated runoff ahead of next month's election, two polls showed on Monday.

The closely contested race has kept investors cautious about taking fresh positions in the assets of the region's largest economy.

The real declined 0.5% to a six-week low, while its stocks .BVSP rose 0.2%.

Brazil's current account deficit reached $5.1 billion in August, more than $4.9 billion expected by economists polled by Reuters, data showed on Monday.

The Mexican peso fell 0.7%, and its benchmark index .MXX was little changed.

The Colombian peso dropped 1.4%, pulling back after strong gains in the previous session, while the Chilean peso also weakened 0.9%, tracking softer copper prices.

Weaker precious metal prices weighed on Peruvian assets. The sol fell 1.2% to its lowest since June 9, while its stocks .MXNUAMPESCPGPE also slied 1%.

Elsewhere in emerging markets, S&P affirmed Malaysia's foreign currency rating to "A/A-2".

Key Latin American stock indexes and currencies at 14:33 GMT