EMERGING MARKETS-Latam FX, stocks weaken after US data boosts dollar, Treasury yields

* US PPI data stronger than expected * Brazil retail sales jump more than expected * Argentina's Senate begins debate on Milei's economic reforms * Embraer shares leap to eight-year high (Updated at 4pm ET/2000 GMT) By Sruthi Shankar and Lisa Pauline Mattackal March 14 (Reuters) - Most Latin American currencies and stock indexes came under pressure on Thursday as hotter-than-expected U.S. inflation data clouded expectations for Federal Reserve interest rate cuts, boosting the dollar and Treasury yields. The dollar index, which gauges the currency against six major peers, leapt 0.6% after data showed U.S. producer prices increased more than expected in February, raising concerns that U.S. inflation was picking up again. The MSCI index tracking Latin American currencies edged down 0.1% after briefly touching its highest intraday level since 2011 earlier in the day. Traders trimmed bets of a June start to U.S. interest-rate cuts, though overall expectations for a cut at that meeting remain above 60% according to CME's FedWatch tool. "Core PPI advanced 0.3% from the previous month, suggesting that inflation remains elevated and will continue to complicate the Federal Reserve's rate-cutting plans," said Jack Ablin, chief investment officer at Cresset Capital. Following a strong 2023, Latin American markets have struggled to make headway this year as investors grapple with uncertainty around when U.S. interest would start falling, which in turn would weaken the dollar and boost local currencies. "Most emerging market currencies have depreciated in real terms, implying emerging value, although the extent varies significantly," analysts at Schroders wrote in a note. The Brazilian real slipped 0.4% to trade at 4.991 per dollar, despite data showing Brazil's retail sales volume grew 2.5% in January from the previous month, the biggest increase in a year and well above analysts' estimates. The monetary policy committee of Brazil's central bank will meet next week. The authority kicked off its easing cycle in August. The Mexican peso and Peruvian sol fell 0.4% and 0.3%, respectively. Colombia's peso and Chilean peso were in the green, up 0.3% and 0.6%, respectively. Stock markets in the region were mixed on Thursday, with Brazil's Bovespa down 0.4%. MSCI's gauge of Latam stocks lost 0.5%. Argentina's Senate began a crunch debate on President Javier Milei's sprawling "mega decree" of economic reforms, a major test of the libertarian leader's ability to win over support in a fragmented Congress. Argentina's Merval index slipped 1.4%. Embraer gained nearly 10% after Morgan Stanley added the Brazilian planemaker to its top pick list. Miner Vale fell 1.4%, as iron ore futures extended losses in China. Cemex shares jumped nearly 4% after S&P raised the Mexican cement maker's debt to investment-grade on Wednesday. Key Latin American stock indexes and currencies at 2000 GMT: Latest Daily % change MSCI Emerging Markets 1046.51 0 MSCI LatAm 2506.78 -0.53 Brazil Bovespa 127512.15 -0.39 Mexico IPC 55981.59 0.24 Chile IPSA 6460.71 -0.47 Argentina MerVal 1036064.17 -1.394 Colombia COLCAP 1283.00 -0.09 Currencies Latest Daily % change Brazil real 4.9917 -0.35 Mexico peso 16.7147 -0.33 Chile peso 939.7 0.61 Colombia peso 3890.06 0.28 Peru sol 3.6729 -0.30 Argentina peso 850.0000 0.00 (interbank) Argentina peso 1005 2.99 (parallel) (Reporting by Sruthi Shankar and Lisa Mattackal in Bengaluru Editing by Jan Harvey and Matthew Lewis)