EMERGING MARKETS-Mexican peso pares losses after rate cut; Latam FX weakens as dollar rises

* Brazil cuts rates by 50 bps, may change course after May * Mexico central bank cuts rates to 11% * Turkey's surprise rate hike boosts bonds, the lira * Colombia central bank decision due Friday (Updated at 4pm ET/2000 ET) By Ankika Biswas and Lisa Pauline Mattackal March 21 (Reuters) - Mexico's peso recouped some of the day's losses after an expected interest rate cut on Thursday but remained down on the day, along with most regional currencies, as the dollar recovered ground. The Bank of Mexico, or Banxico, cut benchmark interest rates by 25 basis points to 11%, the first rate cut since the bank embarked on a tightening cycle in 2021. Banxico said it will thoroughly monitor inflationary pressures and that at its next monetary policy meetings, "it will make its decisions depending on available information." The peso was down 0.4% on the day, although regaining some ground lost earlier in the session. Further pressuring emerging market currencies, the dollar index recouped Wednesday's losses after Fed Chair Jerome Powell said recent high inflation readings had not altered the central bank's stance as it stayed on track for three interest rate cuts. Juan Perez, director of trading at Monex USA, also pointed to the Swiss National Bank's unexpected rate cut that likely puts pressure on most developed economies to start easing and also on emerging markets to further loosen their monetary policy. Brazil's real fell 0.2% to 4.9788 per dollar after its central bank cut the benchmark rate by 50 basis points on Wednesday, while flagging it may change the course of the current easing cycle after May. "For now, we continue to expect 50 bps to be the default for rate cuts in the coming months; however, the bar to slow the pace is now lower," Wilson Ferrarezi, Brazil economist at TS Lombard said. Colombia's rate decision is due on Friday, with a Reuters poll showing analysts expect the central bank to slash rates by twice as much as in previous months. Colombia's peso lost 0.8%. Chile's peso weakened over 1%. MSCI's basket of Latin American stocks edged down 0.1%. Meanwhile, Turkey unexpectedly raised interest rates by 500 basis points to 50%, citing a deteriorating inflation outlook and pledged to tighten further if need be. The lira firmed to 31.91 per dollar - its strongest level since March 7 - after the decision, international dollar-denominated bonds extended their earlier gains, and the Istanbul stock market climbed more than 2%. "With local elections coming up, very few were expecting a rate rise. There has been a debate over how independent the central bank can be from politics so this move is going to reassure investors," said Cagri Kutman, Turkish market specialist at KNG Securities. Highlights: ** Brazil holds growth forecasts at 2.2% for 2024, 2.8% for 2025 ** Sri Lanka bonds jump as debt restructuring talks set for next week Key Latin American stock indexes and currencies at 2000 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1.37 1046.22 MSCI LatAm -0.12 2527.12 Brazil Bovespa -0.74 128171.65 Mexico IPC 0.03 56636.85 Chile IPSA -0.24 6485.92 Argentina MerVal 3.38 1225265.41 Colombia COLCAP 0.49 1315.17 Currencies Latest Daily % change Brazil real -0.20 4.9788 Mexico peso -0.42 16.7430 Chile peso -1.08 972.80 Colombia peso -0.8 3900.68 Peru sol 0.15 3.6725 Argentina peso (interbank) 854.0000 -0.06 Argentina peso (parallel) 1010 1.98 (Reporting by Ankika Biswas and Lisa Mattackal in Bengaluru Editing by Mark Potter and Alistair Bell)