EMERGING MARKETS-Latam assets rise in choppy trading to end sour start to 2024 for emerging markets

* EM stocks index set for worst week since October * Latam stocks up 1.3%, FX up 0.8% * EM bond fund outflows accelerate - JPM data * Brazil's industrial output rises * Chile central bank considered 50 or 75bps rate cut in December (Updated at 2:45 p.m. ET/1945 GMT) By Siddarth S and Lisa Pauline Mattackal Jan 5 (Reuters) - Latin American assets broadly rose on Friday, as investors digested contrasting U.S. economic data to gauge when the Federal Reserve could reduce borrowing costs, ending the first week of 2024 on a bright note. The MSCI index tracking Latin American stocks was up 1.3%, while a basket of regional currencies rose 0.8%. Both indexes were set for their best day since Dec. 19, after data showed the U.S. services sector slowed considerably in December with a measure of employment dropping to the lowest level in nearly 3-1/2 years. That data offset a robust U.S. jobs report released earlier in the day that led investors to dial back bets on Federal Reserve interest rate cuts in March. EM assets reversed earlier losses as the U.S. dollar and Treasury yields fell back after the service-sector data. "ISM (Institute for Supply Management data) could be used by the Fed as evidence that they may need to consider cuts if this trend remains on losing jobs in services," said Juan Perez, director of trading at Monex. Latam assets had a robust end to 2023, prompted by the Fed's dovish stance, but hopes for early rate cuts have since waned. The broader Latam stocks and currencies indexes were set to log weekly declines of 2% and 0.1%, respectively. Meanwhile, MSCI's global emerging market stock index dropped 2.1% for the week, its sharpest drop since mid-October. Bourses in Brazil, Mexico and Colombia jumped between 0.3% and 1.9%. Brazil's financial-sector stocks regained some ground lost on Thursday with Itau Unibanco shares rising over 2%, while Mexico's Grupo Financiero Inbursa SAB de CV leapt 4.3%. On the data front, industrial production in Brazil rose for the fourth consecutive month in November, exceeding market forecasts, while Brazil's government debt as a share of gross domestic product (GDP) dropped to 73.8% in November. Brazil's real climbed 0.5%, while Mexico's peso advanced 0.7% and Colombia's peso gained 1.5%. Chile's central bank evaluated lowering the benchmark interest rate by either 50 or 75 basis points at its December meeting, according to minutes of the meeting. "I see the Chilean central bank as particularly cautious in its handling of monetary policy," said Jorge Selaive, chief economist of Chile at Scotiabank. The Chilean peso was little changed. Argentina's government announced it will raise $3.2 billion in hard currency in order to meet debt repayments via an issuance of 10-year bills to the central bank. Outflows from emerging market bond funds accelerated in the week to Thursday, with $568 million in outflows while EM equity funds had inflows of $293 million, JP Morgan said. Key Latin American stock indexes and currencies at 1945 GMT: Latest Daily % change MSCI Emerging Markets 1001.88 -0.24 MSCI LatAm 2609.06 1.27 Brazil Bovespa 131677.58 0.34 Mexico IPC 56043.68 1.15 Chile IPSA 6047.64 -0.47 Argentina MerVal 1057080.24 5.204 Colombia COLCAP 1291.04 1.88 Currencies Latest Daily % change Brazil real 4.8763 -0.10 Mexico peso 16.8882 0.71 Chile peso 888.4 0.02 Colombia peso 3873.72 1.39 Peru sol 3.6879 0.19 Argentina peso 812.2000 -0.05 (interbank) Argentina peso 1005 1.49 (parallel) (Reporting by Siddarth S and Lisa Mattackal in Bengaluru Editing by Mark Potter and Matthew Lewis)