EMERGING MARKETS-Latam assets dip as caution reigns ahead of Fed meeting, commodity prices fall

* Brazil's central government deficit soars in 2023 * Argentina gov't withdraws fiscal portion of omnibus bill * Moody's upgrades Embraer's credit rating * Latam stocks, FX both dip 0.4% (Updated at 3:15pm ET/2015 GMT) By Amruta Khandekar Jan 29 (Reuters) - Major currencies and stocks in resource-rich Latin America fell on Monday as a risk-off mood gripped markets ahead of the U.S. Federal Reserve's rate verdict this week and as worries about demand from China weighed on commodity prices. MSCI's index for Latin American currencies slipped 0.4% as the dollar firmed. Regional stocks also slipped 0.4%, snapping a four-day winning streak. Focus now turns to the Fed's rate announcement on Wednesday, where policymakers are widely expected to hold rates, but the statement and press conference will be parsed for clues on when interest rates could be cut. Most Latin American stocks and currencies ended last week in the green after data showed U.S. inflation trending lower, lifting hopes that borrowing costs could come down after reaching their highest level in decades. A slew of local policy decisions is also due this week, including from Brazil and Chile, which have both started lowering rates. "The normalization of inflation continues to unfold in Latin America, allowing central banks to further adjust the still-tight monetary stances," J.P. Morgan economists said in a note, but flagged risks from geopolitical tensions. The Brazilian real dipped 0.5% against the dollar in its worst session in one week after data showed the central government posted a 2023 primary budget deficit of 230.5 billion reais ($47 billion). The Bovespa index slipped 0.5%, led by embattled airline Gol which slumped more than 28%. Chile's peso slipped 0.8% while the Peruvian sol weakened to 3.7984 per dollar, as prices of copper retreated due to mounting troubles in China's property sector. Both countries are top exporters of the red metal. The Mexican peso and the Colombian peso weakened 0.3% and 0.6% respectively, as China demand worries weighed on oil prices. Elsewhere, a White House official announced the U.S. will reinstate sanctions on Venezuela's oil sector if the government does not lift its ban on a leading opposition candidate running for president later this year. Argentinian stocks ended the day about flat after paring early losses following the government's withdrawal of major spending reforms from a sweeping "omnibus" bill in Congress to facilitate its approval. While the move increases the odds of the law passing through Congress, "the core of the policies needed to rebalance the Argentine economy must come from the “macro” side (e.g., fiscal, and monetary) and a deep fiscal adjustment is necessary," Goldman Sachs economists said. Shares of Mexican poultry firm Bachoco jumped more than 25% after the company announced that its delisting process was almost completed. Meanwhile, Moody's Investors Service upgraded the debt ratings of Embraer by one notch to Ba1. Key Latin American stock indexes and currencies at 2015 GMT: Latest Daily % change MSCI Emerging Markets 991.07 0.61 MSCI LatAm 2542.36 -0.41 Brazil Bovespa 128295.27 -0.52 Mexico IPC 57139.07 0.5 Chile IPSA 6064.57 0.1 Argentina MerVal 1253607.96 -0.001 Colombia COLCAP 1277.95 -0.35 Currencies Latest Daily % change Brazil real 4.9419 0.18 Mexico peso 17.1965 -0.25 Chile peso 929.5 -0.76 Colombia peso 3924.22 -0.57 Peru sol 3.7984 -0.44 Argentina peso 825.2000 -0.19 (interbank) Argentina peso 1205 1.24 (parallel) (Reporting by Amruta Khandekar and Lisa Mattackal in Bengaluru Editing by Andrea Ricci and Matthew Lewis)