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EMERGING MARKETS-Latam FX give back gains as dollar shoots higher after Fed

* Fed says U.S. interest rates could rise soon * Brazil real leads declines among Latam FX * Ukraine crisis hurts CEEMEA currencies (Adds comments, bullets; updates to prices throughout) By Susan Mathew and Shreyashi Sanyal Jan 26 (Reuters) - Latin American currencies fell by afternoon trading on Wednesday as the dollar shot up after the U.S. Federal Reserve signaled it would raise interest rates in March, while currencies of Russia and Ukraine buckled under geopolitical pressure. The dollar rose after the Fed reaffirmed plans to end its bond purchases in March as well, before launching what was characterized as a significant reduction in its asset holdings. "Market volatility has escalated due to fears about the change in Fed policy," said John Lynch, chief investment officer for Comerica Wealth Management. "We believe the Fed has been as explicit as possible, yet uncertainty about the extent of liquidity has the markets on edge." Brazil's real rose fell 0.2% against a stronger dollar as data showing inflation rose more than expected in the month to mid-January. Inflation decelerated over the previous month, but annual inflation stands at 10.2%, much higher than the central bank's target of 3.5%. This puts pressure on the central bank to continue raising the key Selic interest rate again after last year's aggressive 725 basis points worth of hikes. "The central bank is on course to hike the Selic rate by another 150bps to 10.75% next Wednesday," said William Jackson, chief EM economist at Capital Economics. "That said, with inflation now past its peak and likely to fall in the coming months, policymakers may signal that the pace of tightening will slow at the subsequent few meetings." The Organisation for Economic Co-operation and Development (OECD) said on Tuesday it had begun talks to allow Brazil, Argentina and Peru among others to join the club of rich nations. Brazil hopes that joining the OECD would boost investor confidence as it battles high inflation and unemployment. A source in Brazil said the average time to enter the Paris-based body at this point was three to five years. Mexico's peso shed 0.6%, while Chile fell 0.4%. Higher oil prices boosted Colombia's peso. Stocks in the region rose, with Brazil's Bovespa index hitting over three-month highs. Gains were led by a 9% jump in shares of pet retailer Petz, which struck a deal to buy dog potty pads manufacturer Petix in a 70 million reais ($12.85 million) stock and cash deal. Currencies in emerging European economies fell, with those of Russia, Ukraine and Belarus losing between 0.1% and 1.1% against the dollar. Hungry's forint failed to sustain gains from Tuesday's larger-than-expected rate hike. Russia warned on Wednesday that imposing sanctions on President Vladimir Putin personally would not hurt him but would be "politically destructive," after U.S. President Joe Biden said he would consider such a move if Russia invaded Ukraine. Key Latin American stock indexes and currencies at 2006 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1210.26 -0.02 MSCI LatAm 2238.05 0.89 Brazil Bovespa 112072.14 1.7 Mexico IPC 51245.48 0.28 Chile IPSA 4552.33 0.51 Argentina MerVal 86131.19 1.116 Colombia COLCAP 1525.74 -0.11 Currencies Latest Daily % change Brazil real 5.4510 -0.24 Mexico peso 20.7209 -0.58 Chile peso 800.5 0.00 Colombia peso 3924.22 1.00 Peru sol 3.8266 0.21 Argentina peso (interbank) 104.7000 -0.08 Argentina peso (parallel) 218 0.69 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru; Editing by Shinjini Ganguli and Jonathan Oatis)