EMERGING MARKETS-Brazil's real leads Latam recovery

* Brazil economic activity slows less than expected in March * Mexico, Peru and Chile c.bank meetings due By Shashank Nayar May 13 (Reuters) - Brazil's real led gains across Latin American currencies on Thursday as economic growth slowed less than expected, while most other stocks and currencies recovered from steep losses in the prior session after a spike in U.S. inflation. The real gained 0.9% and was set for its best single day gain in a week, as economic activity in March recorded a smaller decline than economists had expected, implying that first quarter economic growth rose 2.3%. The reading outlined a less-than-anticipated impact on the economy from a second wave of COVID-19 infections. Citi also increased its holding of Brazil U.S. dollar sovereign bonds to an overweight position, citing a window of opportunity before elections in October 2022. The real and most other Latam currencies fell on Wednesday after a jump in U.S. inflation raised concerns the Federal Reserve would bring forward its timeline for tightening policy. But a sluggish labor market recovery has seen the Fed exude largely dovish signals, even as data showed fewer Americans filed new claims for unemployment benefits last week, beating economist forecasts. Mexico's peso rose 0.3% ahead of its central bank's rate setting meeting, recovering from its worst day in nearly two months. The bank is expected to leave rates unchanged as inflation in the country remains well above the Banxico's target range. "Continued upward pressures on inflation, stronger and more resilient than expected real activity dynamics, uncertain global inflation dynamics and approaching elections fully validate a conservative monetary policy comittee posture and holding the policy rate at a moderately stimulative 4.00%," Goldman Sachs analysts wrote in a note. The Chilean peso held steady and Peruvian sol gained 0.1% ahead of their respective central bank meetings later in the day. The Argentine peso was flat as inflation likely eased slightly to around 3.8% in April, a Reuters poll of analysts showed, coming off a peak the month earlier that was its highest since 2019, as the South American country battles to rein in rising prices.. Colombia's peso gained 0.5%, after marking its worst day in more than a week as rising social unrest due to anti-government protests sullied the country's economic outlook. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging 1300.17 -1.15 Markets MSCI LatAm 2482.07 0.59 Brazil Bovespa 121240.14 1.28 Mexico IPC 49016.79 0.56 Chile IPSA 4530.35 0.99 Argentina MerVal - - Colombia COLCAP 1285.87 0.04 Currencies Latest Daily % change Brazil real 5.2592 0.84 Mexico peso 20.0991 0.28 Chile peso 707.7 0.01 Colombia peso 3732.08 0.42 Peru sol 3.6998 0.43 Argentina peso 94.01 -0.02 (interbank) (Reporting by Shashank Nayar in Bengaluru; editing by Barbara Lewis)