EMERGING MARKETS-LatAm stocks fall as Middle East tensions weigh, FX mixed ahead of Fed decision

By Utkarsh Hathi

July 29 (Reuters) - Latin American currencies were mixed against the dollar on Wednesday ahead of the U.S. Federal Reserve's policy decision and outlook, while most stocks fell as investors assessed Middle East developments.

The Fed is widely expected to keep rates unchanged later in the day. Investors will be more focused on the central bank's statement given some policymakers' hawkish signaling ahead of the meeting to curb inflation as uncertainty lingers about energy supply.

Oil prices rose 7% after three straight sessions of sharp losses as hostilities in the Middle East resumed, with the U.S. and Saudi Arabia jointly striking Iran-backed armed groups in Iraq on Wednesday.

Among Latin American currencies, the Peruvian sol PEN= gained 0.1%. Keiko Fujimori was sworn in as Peru's first-ever elected female president on Tuesday, extending the broader rightward shift in the region.

The Argentine peso ARS=RASL gained 0.2%, while the Colombian peso COP= edged 0.2% lower, though hovering near a seven-year high. The currency has outperformed its regional peers this year, with the presidential election win by right-winger Abelardo de la Espriella last month providing further momentum.

"The total return component of EM fixed income investing is still really good. And ultimately, if you get better leadership and regime changes that the market supports, that's going to be good for currencies as well," said Jack Herr, senior investment analyst at Guidestone.

MSCI's Latin American currency index .MILA00000CUS edged 0.2% lower, while its equivalent equities gauge .MILA00000PUS fell 1.2%.

Stocks in the region have been largely insulated from the broader emerging-market sell-off driven by the global technology rout and rising oil prices.

Meanwhile, in Brazil, a poll showed that President Luiz Inacio Lula da Silva was leading a potential second-round vote in the October presidential election against opposition Senator Flavio Bolsonaro.

Brazil's Bovespa share index .BVSP declined 0.8%, and the real BRL= slipped 0.2%.

Equities in Argentina .MERV fell 0.7%, while Mexico's benchmark .MXX declined 0.9%, tracking lower copper prices.

Separately, Bolivia reached an agreement with the International Monetary Fund on a program worth about $1.9 billion to support the country's economic reform.

Markets in Peru were closed on a national holiday.

Key Latin American stock indexes and currencies at 15:02 GMT

(Reporting by Utkarsh Hathi in Bengaluru; Editing by Toby Chopra)

((utkarshtushar.hathi@thomsonreuters.com))