EMERGING MARKETS-Retreating dollar, fading risk aversion relieves pressure on Latam markets

* Argentina's Milei touts rare government surplus * Colombia predicts $10 bln in foreign investment from Europe this year-minister * Mexican peso rises after three days of losses * Latam FX up 1%, stocks add 1.1% (Updated at 3:30pm ET/1930 GMT) By Bansari Mayur Kamdar April 23 (Reuters) - Latin American currencies extended gains for a third straight session on Tuesday as investors grew less cautious about risk assets and a softer U.S. dollar relieved pressure on emerging markets. MSCI's index for Latin American currencies jumped 1% as the dollar index fell 0.4%. Mexico's peso led regional gains, rising 1% to 16.969 per dollar after a three-session decline. "The peso remains extremely over valued vs history and EM peers, but the positive drivers from a robust US economy likely outweigh the negative impact of a stronger dollar," said Jon Harrison, managing director of EM macro strategy at GlobalData TS Lombard, in a note. Concerns around a major re-escalation of Middle East tensions abated, and U.S. Treasury yields eased after data showed U.S. business activity cooled. Emerging market currencies have struggled against gains in the dollar and Treasury yields in past weeks, as traders continue to postpone expectations for U.S. interest rate cuts this year. Investors awaited inflation data in Mexico due later this week. A basket of Latin American stocks jumped 1.1%. Mexican breadmaker Bimbo shares lost 2% after the breadmaker said first-quarter net profit fell 42% from a year earlier, citing the impact of a strong peso and weaker spending in its North American markets. Shares of Mexican airline Volaris jumped as much as 14% after it posted a first-quarter net profit. The stock was last up 4.8%. Brazil's real and Colombia's peso climbed 0.8% and 0.2% against the greenback. Colombia expects to attract $10 billion in foreign investment from Europe this year, especially in renewable energy, Finance Minister Ricardo Bonilla said. However, Chile's peso and Peru's sol each lost about 0.3% as copper prices slipped. Both countries are top copper producers. Foreigners added about $32.7 billion to emerging market portfolios in March, a fifth consecutive month of overall foreign net inflows including stocks and bonds, the Institute of International Finance said. In Argentina, economic activity decreased 3.2% in February from a year earlier, less than forecast, official data showed. Hungary's central bank cited "no need to rush" with further rate cuts after lowering its base rate by 50 basis points, as expected. Egyptian authorities have committed to ending direct borrowings from the central bank, the International Monetary Fund said in a staff report. HIGHLIGHTS: ** ANALYSIS-Argentina's Milei revs up chainsaw and blender in fiscal deficit attack ** Ecuador scoping out new debt-for-nature swaps - sources ** Indian regulator finds Adani offshore investors in disclosure rules violation: sources Key Latin American stock indexes and currencies at 1930 GMT: Latest Daily % change MSCI Emerging Markets 1020.71 0.88 MSCI LatAm 2450.63 1.11 Brazil Bovespa 125489.50 -0.07 Mexico IPC 56835.91 0.5 Chile IPSA 6463.91 1.54 Argentina MerVal 1253205.54 -1.196 Colombia COLCAP 1349.25 0.37 Currencies Latest Daily % change Brazil real 5.1283 0.79 Mexico peso 16.9690 0.96 Chile peso 954.3 -0.28 Colombia peso 3907.09 0.15 Peru sol 3.6953 -0.27 Argentina peso 872.5000 0.00 (interbank) Argentina peso 1010 2.48 (parallel) (Reporting by Bansari Mayur Kamdar and Lisa Mattackal in Bengaluru; Editing by Alistair Bell and Richard Chang)