By Purvi Agarwal

May 15 (Reuters) - Latin American assets tumbled on Friday as inflation concerns pushed up the dollar and U.S. Treasuries, setting them up for declines in a week dominated by the U.S.-China summit.

MSCI's index tracking LatAm stocks .MILA00000PUS was down 2.3%, while the currencies equivalent .MILA00000CUS was off 0.3%.

Many stock indexes and currencies, alongside the indexes, were set for their steepest weekly falls since early March, when the Iran conflict had started.

U.S. President Donald Trump said he and Chinese President Xi Jinping agreed in talks this week that Iran must re-open the Strait of Hormuz, but a lack of progress on shipping through the channel pushed up oil prices.

Intensifying inflation fears lifted the dollar index =USD and yields on global bonds, with the one on the 10-year Treasury US10YT=RR up at 4.54% - last seen in May 2025. Bond markets began eyeing a U.S. interest rate hike by end-2026.

"EM can do well if the Federal Reserve is not able to cut due to strong global growth, but would be more vulnerable in a scenario of asymmetric growth favoring the US and/or a global stagflationary shock," said analysts at BofA Global Research.

"In the FX space, the BRL should continue to be supported by the commodity outlook and monetary policy, even if the election trigger remains several months ahead."

Brazil's real BRL= led declines, down 1.3%, and set for its weakest weekly performance since early October.

Earlier this week, worries that Senator Flavio Bolsonaro's chances in October's presidential elections could be impacted by a report linking him to a disgraced banker jolted Brazilian markets.

Opinion polls currently put him and President Luiz Inacio Lula da Silva at a 50-50 chance. Brazil has been grappling with high interest rates and deteriorating public finances under Lula, and a re-election could spark a move away from Brazilian markets.

Separately, Brazilian services activity fell more than expected in March compared with the previous month, data showed.

Local stocks .BVSP fell 1.5%, with miner Vale VALE3.SA down 2.5%, tracking sharp falls in gold and silver prices.

Chile's peso CLP= weakened 1%, while its equities .SPIPSA shed 1.4%. Copper prices fell 3% on Friday, hurting assets in the world's largest exporter of the red metal.

Currencies in Mexico MXN= and Colombia COP= depreciated 0.6% and 0.4% respectively, in-line with broader markets. Mexican stocks .MXX were hurt by a 5.6% drop in miner Grupo Mexico GMEXICOB.MX.

Peru's sol PEN= and stocks .MXNUAMPESCPGPE were down 0.4% and 1.8% respectively, a day after its central bank held interest rates steady at 4.25%, as expected.

Venezuela's bonds rallied on Thursday after it said it would restructure its bonds in one of the most complex exercises ever undertaken.

They eased on Friday, in-line with broader bond markets, with the 2026 USP17625AE71=TE and 2031 USP17625AD98=TE maturities down 1.3 cents and 1.7 cents respectively.

Key Latin American stock indexes and currencies:

Latin American market prices from Reuters
Equities	Latest	Daily % change
MSCI Emerging Markets .MSCIEF	1670.11	-2.72
MSCI LatAm .MILA00000PUS	3030.48	-2.26
Brazil Bovespa .BVSP	175733.59	-1.48
Mexico IPC .MXX	68232.98	-1.41
Chile IPSA .SPIPSA	10331.85	-1.43
Argentina Merval .MERV	2740878.74	-0.23
Colombia COLCAP .COLCAP	2118.23	-0.18
Currencies	Latest	Daily % change
Brazil real BRL=	5.0463	-1.33
Mexico peso MXN=	17.314	-0.57
Chile peso CLP=	904.5	-0.96
Colombia peso COP=	3789.71	-0.35
Peru sol PEN=	3.4347	-0.40
Argentina peso (interbank) ARS=RASL	1393	0.18
Argentina peso (parallel) ARSB=	1400	0