EMERGING MARKETS-Latam FX gain, Brazil's real gets boost from strong services data

* Brazil services activity grows 0.5% in July * Argentina inflation hits 124% * China cuts banks' reserve ratio for second time in 2023 * Latam FX up 0.4%, stocks up 1.2% By Johann M Cherian and Amruta Khandekar Sept 14 (Reuters) - Most Latin American currencies advanced on Thursday as expectations of the Federal Reserve pausing rate hikes next week stayed intact despite robust economic data, with the Brazilian real leading gains after a strong services activity report. The Latin American currencies index added 0.4% against the greenback as a fresh batch of strong data including on producer prices and retail sales failed to deter hopes that the U.S. Federal Reserve will leave interest rates unchanged on Sept.20. The real rose 0.9% by 1458 GMT to a two-week high as data showed services activity in Brazil grew slightly more than expected by 0.5% in July on a monthly basis. The data comes amid bets the Brazilian central bank will deliver another rate cut this month after it became one of the first central banks to kickstart a monetary easing cycle among major Latin American economies in August. "Latin America started early the process of raising rates to fight inflation. Now that the new administration in Brazil has brought some credibility into fiscal management, there is greater conviction on the speed of rate cuts there," said Antonio Miranda, senior advisor at Latin American asset manager Compass. Rising commodity prices also gave a fillip to Latin American currencies on Thursday after top consumer China's central bank said it would cut the amount of cash that banks must hold as reserves for the second time this year to support the country's economic recovery. Top copper producer Peru's sol rose 0.3%, helped by gains in prices of the red metal. Later in the day, traders also await Peru's interest rate decision, where analysts expect the central bank to cut borrowing costs by 25 basis points. Major exporter Mexico's peso climbed 0.2% as oil prices rose, with Brent crude topping $93 a barrel for the first time this year on tighter supply expectations for the rest of 2023. Colombia's peso, the currency of another top crude exporter, was up 0.2% at an over six-week high. After a sharp fall in August on concerns over interest rate cuts reducing returns, Latin American currencies have regained some ground in September on gains in commodity prices and signs of stabilisation in China's economy. Chile's peso shed 0.7%, bucking the trend. Argentina's peso strengthened to 723 per dollar in parallel trade after the country's annual inflation rate shot up to 124.4% in August and hit its highest level since 1991, stoking a painful cost-of-living crisis in the South American country. Argentina's S&P MerVal index jumped 2.2% with broader Latam stocks up 1.2%. Key Latin American stock indexes and currencies at 1458 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 981.64 0.73 MSCI LatAm 2397.49 1.21 Brazil Bovespa 119302.00 0.95 Mexico IPC 51665.93 0.28 Chile IPSA 5974.77 1 Argentina MerVal 565485.46 2.182 Colombia COLCAP 1076.94 -0.08 Currencies Latest Daily % change Brazil real 4.8733 0.87 Mexico peso 17.1174 0.17 Chile peso 886.7 -0.77 Colombia peso 3930.43 0.23 Peru sol 3.7084 0.33 Argentina peso 349.9500 0.03 (interbank) Argentina peso 723 1.66 (parallel) (Reporting by Johann M Cherian and Amruta Kandekar in Bengaluru; Editing by Josie Kao)