EMERGING MARKETS-Latam stocks slip as inflation fears abound

SAO PAULO, Feb 9 (Reuters) - Latin American stocks slipped in early trading on Wednesday as investors fretted that rising consumer prices around the world could prompt governments to brake economic growth to contain inflation.

The MSCI Latin American stocks index .MILA00000PUS dipped 0.41 percent, following a two-day rally.

"This question of inflation is prevailing lately, along with what consequences it could bring," said Luciano Rostagno, chief strategist with CM Capital Markets in Sao Paulo.

Speeding prices are pressuring economies from China to Brazil and Chile. The former, a major trading partner for Latin America, hiked interest rates earlier this week, and the latter is expected to hike rates soon.

"Inflation is definitely on the rise," Mauricio Rosal, chief Brazil economist for Raymond James, wrote in a report to clients.

"We are raising our year-end inflation forecasts (for Brazil) to 6.1 percent and 4.9 percent for 2011 and 2012 from 5.0 percent and 4.7 percent, respectively, as we believe monetary and fiscal policies are running behind the curve," he added.

Markets were also awaiting testimony from U.S. Federal Reserve Chairman Ben Bernanke before Congress later in the day.

The world's largest economy is a major influence on Latin America, consuming the lion's share of Mexican exports. Bernanke's appearance is scheduled for 1500 GMT. [ID:nN04173826]

U.S. stock futures slid ahead of Bernanke's testimony, as well. [ID:nN09143899]

Brazil's benchmark Bovespa stock index .BVSP dropped 0.66 percent in the early session, after rising for the past two sessions.

Shares of state-controlled energy company Petrobras (PETR4.SA) dipped 0.67 percent, leading losses in Sao Paulo.

Heavyweight mining company Vale (VALE5.SA), the world's largest producer of iron ore, gave up 0.5 percent for what could be a fourth straight session of losses.

In contrast, oil and gas company OGX (OGXP3.SA) rose 0.76 percent. The company said Wednesday its 9-OGX-26HP well, whose drilling was recently concluded, has a potential flow of 40,000 barrels per day. [ID:nN09143293]

Chile's IPSA index .IPSA fell 0.82 percent, sinking to a five-month low as low volumes magnify the effect of shifting portfolios and profit-taking after a 40 percent rally in 2010.

The index fell below its 200-day simple moving average for the first time since April 2009, suggesting a key support level had eroded.

Retailers pulled the index lower, with shares of Falabella (FAL.SN) down 1.32 percent and Cencosud (CEN.SN) 1.36 percent.

Source: http://www.reuters.com