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EMERGING MARKETS-Most Latam stocks set for worst quarter since March 2020

* EM stocks set for worst H1 * Colombia hikes by 150 bps to 7.5% * Inflation in Brazil seen decelerating - central bank (Updates prices) By Susan Mathew June 30 (Reuters) - Latin American stocks fell on Thursday, with most marking their worst quarter since the pandemic-plagued first quarter of 2020, while a large interest rate hike by Colombia's central bank knocked local stocks to session lows. Worries about the fallout from the conflict in Ukraine, and surging inflation causing aggressive central bank moves, have kept investors jittery so far this year. "A deterioration in macroeconomic conditions is becoming more visible in emerging markets, raising the level of investor unease," said Alejo Czerwonko, chief investment officer, EM Americas, at UBS Global Wealth Management. MSCI's index of emerging market stocks is down about 19% since the beginning of the year, its worst first-half on record. Its currencies counterpart's 4% slide is its worst since the first six months of the pandemic ravaged 2020 . But in the light of economic uncertainties, emerging market assets offer portfolios an inexpensive way to diversify compared with developed market assets, Czerwonko said. "While U.S. stocks have only recently reached long-term valuation averages, emerging market equities are already trading at an 11x forward price-to-earnings ratio, well below their 10-year mean." In Latam, stocks slipped, with Brazil's benchmark index down 1.3%, as Wall Street looked to end the last session of one of its worst first halves in the red. Over the quarter, Chile's index was on track to end about 0.8% higher, outperforming not just regional peers, but broader emerging markets whose quarterly losses were only topped by the slide in March 2020. Colombia's index lost 0.7% on Thursday after the central bank raised interest rates by 150 basis points to 7.50%, as expected, as the battle against inflation continued. In what could further bolster Colombia's currency when it reacts to the decision on Friday, the bank raised its economic growth outlook for 2022 to 6.3%, from 5.0% previously. Colombia's leftist President-elect Gustavo Petro picked market-friendly Jose Antonio Ocampo to be finance minister. "It may be a positive thing for the country that Petro is choosing a very mixed cabinet. So that, in long term, will help the Colombian peso," Juan Perez, senior currency trader at Monex USA, said. Brazil's real fell 0.8%. Its central bank expects 12-month inflation to decelerate to 11.31% in August from 11.73% in May, in line with its expectation that inflation will have peaked. The real was on course for a near 10% quarterly slide, compared with a 1.4% slide in the Mexican peso. Key Latin American stock indexes and currencies 1921 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1001.80 -1.13 MSCI LatAm 2049.25 -0.88 Brazil Bovespa 98418.82 -1.21 Mexico IPC 47900.78 -0.33 Chile IPSA 4971.31 -0.76 Argentina MerVal 88635.33 0.573 Colombia COLCAP 1337.73 -0.68 Currencies Latest Daily % change Brazil real 5.2299 -0.76 Mexico peso 20.1440 -0.16 Chile peso 917.2 0.96 Colombia peso 4141.97 -0.83 Peru sol 3.8152 -1.12 Argentina peso 125.2100 -0.13 (interbank) (Reporting by Susan Mathew and Devik Jain in Bengaluru; Editing by Nick Zieminski)