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EMERGING MARKETS-Brazil's real inches up on rate hike bets, stocks outperform

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* Rate hike of at least 100 bps expected in Brazil * Peru's sol falls as copper mine protests spread * Brazil stocks propped up by strong earnings (Adds details, updates prices) By Susan Mathew and Ambar Warrick Oct 27 (Reuters) - Brazil's real edged higher on growing bets the country's central bank would announce a larger-than-expected interest rate hike on Wednesday, while stocks in Latin America's largest economy outpaced their regional peers on a strong batch of earnings. Most other Latin American currencies were flat to lower as concerns over U.S.-China tensions weighed, particularly after the U.S. Federal Communications Commission voted to revoke authorization for China Telecom's U.S. subsidiary to operate in the country. Latin American stocks tumbled on the news, tracking losses in global equities. But Brazil's Bovespa rose 0.8%. Shares of Banco Inter SA rose 1.3% after the Brazilian digital bank reported a third-quarter profit, while Banco Santander Brasil SA added 0.4% after its profit jumped 12.5%. The real gained 0.1% as expectations of a bumper interest rate hike were tempered by rising worries about the government breaching its spending cap, as well as surging inflation. Analysts speculated that the central bank may hike its key interest rate by more than the 100 basis points expected in a Reuters poll. "We expect (Brazil's central bank) to make a more aggressive policy rate adjustment by hiking rates by 150bps, aimed at containing inflation expectations and stabilizing BRL. There is some risk of an even more aggressive move," said Sacha Tihanyi, head of emerging markets strategy at TD Securities. "The risk to BRL is skewed to the downside. We believe that a 150bp rate hike, with a commitment of another equivalent hike at the December meeting, will be required to bolster BRL." But market experts have warned that the aggressive pace of hikes - 425 basis points already so far this year - could squeeze growth in Brazil. Brazilian President Jair Bolsonaro continues to face political headwinds ahead of elections next year, with deteriorating approval ratings, ongoing corruption scandals, and potential criminal charges over his alleged mishandling of the COVID-19 pandemic. Peru's sol recovered from early losses, rising 0.1% after Prime Minister Mirtha Vasquez said that MMG Ltd's Las Bambas mine will begin transferring tax funds in 2022 to the Apurimac region where its operations take place, a key demand from residents who have been protesting against the company. Vasquez's comments helped ease some concerns over supply disruptions at the mine, which is one of the largest copper producers in the country. Recent protests at copper mines across Peru have raised concerns over the supply of the red metal, which is the country's largest export. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1283.72 -0.95 MSCI LatAm 2182.07 -0.2 Brazil Bovespa 107239.47 0.77 Mexico IPC 51767.05 -0.84 Chile IPSA 4116.60 -3.05 Argentina MerVal 86590.32 -2.607 Colombia COLCAP 1403.56 -0.69 Currencies Latest Daily % change Brazil real 5.5670 0.08 Mexico peso 20.2819 -0.40 Chile peso 805.08 -0.17 Colombia peso 3756.53 0.26 Peru sol 3.9693 0.14 Argentina peso 99.6400 -0.08 (interbank) (Reporting by Susan Mathew in Bengaluru Editing by Paul Simao)

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