EMERGING MARKETS-Brazil’s real leads Latam FX lower before central bank meeting

    * Brazil cenbank chief's comments worrying -trader
    * Chilean markets shut for holiday on Friday
    * Brazil's Vale declares bumper first-half dividend

 (Adds comments, updates prices throughout)
    By Susan Mathew and Shreyashi Sanyal
    Sept 17 (Reuters) - Brazil's real led losses across Latin
American currencies on Friday with all eyes on the central
bank's policy meeting next week, while mining major Vale
 declared a bumper $7.6 billion first-half dividend
payout. 
    The real is down about 0.7% for the week, the
worst performer among regional peers. Next week the central bank
is seen hiking interest rates by 100 basis points as inflation
surges.
    But traders are cautious after central bank chief Roberto
Campos Neto earlier this week said he would not change his plans
with every indicator showing high inflation pressures, signaling
he may hint at a ceiling for the current tightening cycle.

    "Commentary from Neto seemed to indicate there is no
interest to combat inflation with more rate hikes," said Juan
Perez, a senior currency traded at Tempus Consulting. 
    "This is scaring traders because the idea was to count on
tightening, but the lack of concern from the official is making
many think they will stop."
    Political sentiment also weighed on the real as investors
feared populist policies by President Jair Bolsonaro with his
popularity sliding ahead of elections next year.
    Bolsonaro on Thursday signed a decree to raise taxes on
financial transactions - charged on credit, foreign exchange,
insurance transactions, or bonds or securities - for three
months to pay for the so-called Auxílio Brasil pandemic welfare
program.
    Mexico's peso was flat, while Colombia's peso
gave up 0.5% as oil prices fell.
    "Many countries in Latin America could potentially
experience strong post-COVID rebound, but there are also risks
in their financial systems," said John Lau, head of Asian
equities at SEI.
    "Some, such as Brazil, have higher political risks as well.
From a valuation perspective, they are not excessive since most
have lagged the broader EM markets so far this year."
    Markets in Chile were closed for a holiday. 
    In Argentina, the benchmark 2035
dollar-denominated sovereign bond fell slightly. 
    Argentina's center-left President Alberto Fernandez called
for unity on Thursday after a rebellion from hard-left ministers
threatened to break apart the ruling coalition following a
bruising loss in a midterm primary election.
 
    Among shares, iron ore miner Vale lost 1.3% and
hit seven-month lows, tracking a 7% slump in prices of the
steel-making ingredient.
    The company late on Thursday declared a 40.2 billion real,
or 8.11 reais ($1.54) per share, first-half dividend, its
largest payout since the miner's 2019 dam collapse.
    Sao Paulo's Bovespa equity index was down 1.8%,
extending losses to a fourth straight session. It was set to
underperform Latam peers on the week, down 2.1%. 
    El Salvador bonds are eyed after a tumble last session on
fears the country will not reach a potential $1 billion loan
agreement with the International Monetary Fund and faces
negative credit implications linked to its use of bitcoin.

    
    Key Latin American stock indexes and currencies at 1900 GMT:
    
        Stock indexes                 Latest    Daily %
                                                change
 MSCI Emerging Markets                 1277.56     0.06
 MSCI LatAm                            2334.21    -1.95
 Brazil Bovespa                      111747.44     -1.8
 Mexico IPC                           51480.55    -1.36
 Chile IPSA                            4465.47     0.71
 Argentina MerVal                     78859.09   -1.102
 Colombia COLCAP                       1319.85    -0.27
                                                       
            Currencies                Latest    Daily %
                                                change
 Brazil real                            5.2835    -0.37
 Mexico peso                           20.0082    -0.39
 Chile peso                              782.4     0.00
 Colombia peso                         3825.03    -0.27
 Peru sol                               4.1054    -0.32
 Argentina peso (interbank)            98.3500    -0.03
                                                
 Argentina peso (parallel)                 182     2.20
                                                
 

 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru;
Editing by Dan Grebler, William Maclean)