EMERGING MARKETS-Trade angst, Washington's political uncertainty slam Latam assets

By Agamoni Ghosh Sept 25 (Reuters) - Latin American assets slumped on Wednesday as political uncertainty in Washington in wake of an impeachment inquiry into U.S. President Donald Trump and fresh U.S.-China trade tensions jilted investor sentiment. MSCI's index of Latin American stocks and currencies slipped between 0.6% and 1%. Trump delivered a stinging rebuke over China's trade practices on Tuesday to which a top Chinese diplomat hit back saying Beijing had no intention of "playing 'Game of Thrones' on the world stage." The bitter exchange comes just a week before high-level talks are scheduled between the world's two largest economies. "It's a classic risk-off mood today with Latam moves in line with other emerging markets," said Christian Lawrence, senior market strategist, Latam FX at Rabobank. To make things worse, a move to launch an impeachment inquiry into Trump further escalated after the White House released a call summary between the U.S. president and his Ukrainian counterpart Volodymyr Zelenskiy. The summary shows Trump asking Zelenskiy in a July telephone call to investigate whether former Vice President Joe Biden shut down an investigation into a company that employed his son. Mexican stocks fell 1%, while the peso shed 0.7% against the dollar, a day ahead of its monetary policy meeting where expectations are rife for a 25 basis point cut in interest rates for a second time this year. "The central bank will keep cutting rates given this seems like an easing cycle," said Lawrence, "but I don't think inflation is at that level yet where they will opt for a 50 basis point cut." Brazil's real fell for a third-straight session. Data showed loan defaults in Latin America's largest economy rose to 4.0% in August, up from 3.9% the month before and the highest level since January. The Bovespa snapped a four-day gaining streak to fall 0.6% with homebuilder Eztec dropping nearly 5% after the company said it had approved a restricted share offer that will raise almost 1 billion reais ($240 million). Chile's peso fell to their lowest level since January 2016 as prices of copper, the country's top export, slipped. Latin American stock indexes and currencies at 14:52 GMT Stock indexes daily % Latest change MSCI Emerging Markets 1001.32 -0.99 MSCI LatAm 2631.27 -1.08 Brazil Bovespa 103196.99 -0.65 Mexico IPC 42727.79 -0.86 Chile IPSA 4958.20 -0.85 Argentina MerVal 27581.25 -0.857 Colombia IGBC 12848.05 -0.79 Currencies daily % Latest change Brazil real 4.1884 -0.46 Mexico peso 19.5868 -0.75 Chile peso 727.1 -0.56 Colombia peso 3451.78 -0.52 Peru sol 3.3518 -0.32 Argentina peso 57.0000 -0.18 (interbank) (Reporting by Agamoni Ghosh in Bengaluru; Editing by Lisa Shumaker)