EMERGING MARKETS-Latam markets steady as geopolitical fears calm; EM stocks set for worst week since June

* Chile cenbank to cut interest rate by 50bps in May: poll * Mexican inflation coming from abroad -finance official * Mexican peso recovers from 5% plunge * Latam FX up 0.6%, stocks add 1.1% (Updated at 3:45pm ET/1945 GMT) By Bansari Mayur Kamdar April 19 (Reuters) - Latin American stocks and currencies steadied on Friday, recovering from early losses on easing concerns about tensions between Israel and Iran, though emerging market shares were set for their worst week in 10 months as investors grew more cautious. Israel launched an attack on Iranian soil, sources told Reuters, sparking a global risk-off mood in markets that calmed somewhat after Tehran signaled it had no plans for retaliation. The dollar and Treasury yields also fell, relieving pressure in the past week from Mideast tensions and the shift to more hawkish Federal Reserve expectations. MSCI's index of global emerging market stocks lost 1.3% on Friday and was set for its worst week since June. The MSCI index for Latam currencies briefly touched its lowest since November, but recovered to rise 0.6% on the day. It was on track for its second week of declines as the dollar strengthened. "For emerging market currencies outside Asia-Pacific, geopolitical worries and the general reassessment of the Fed outlook were painful," UBS strategists said in a note. The broader emerging market currencies index was flat on the day, and edged down 0.2% on the week. Mexico's peso recovered some ground after falling nearly 5%, last down 0.2%. The peso is down 3% this week, its worst weekly performance since October as a flight to safety hit one of the world's most liquid emerging market currencies. The Bank of Mexico's deputy governor said he saw interest rates on hold for longer than initially expected, while data showed Mexican retail sales rose 0.4% in February from January. Brazil's real rose 1% against the dollar but was still on track for its seventh straight weekly loss. Bucking regional weakness, currencies of top copper producers Chile and Peru both advanced 1.2% as copper prices soared to a two-year high on fund buying spurred by supply concerns. Shares of Brazil's state-owned oil giant Petrobras rose 1.8% after newspaper O Globo reported the company is expected to pay all of the extra dividends withheld in March. Elsewhere, an IMF official said it was "a matter of time" before Ghana agreed to a restructuring with holders of its international bonds. HIGHLIGHTS: ** Political heat prods Japan, South Korea to team up on weak currencies **Vietnam central bank: ready to intervene in FX market **South Korea to take decisive action if needed to stabilize FX market **S&P cuts Israel's credit rating on geopolitical risk Key Latin American stock indexes and currencies at 1945 GMT: Latest Daily % change MSCI Emerging Markets 1005.21 -1.31 MSCI LatAm 2411.90 1.1 Brazil Bovespa 124996.70 0.64 Mexico IPC 55950.21 0.38 Chile IPSA 6380.83 -1.09 Argentina MerVal 1193571.44 1.769 Colombia COLCAP 1332.89 0.9 Currencies Latest Daily % change Brazil real 5.1987 0.99 Mexico peso 17.1158 -0.24 Chile peso 953.4 1.29 Colombia peso 3905.74 0.44 Peru sol 3.6703 1.26 Argentina peso 871.0000 -0.11 (interbank) Argentina peso 995 3.02 (parallel) (Reporting by Bansari Mayur Kamdar and Lisa Mattackal in Bengaluru; Editing by Alexander Smith and Richard Chang)