By Avinash P

June 10 (Reuters) - Latin American stocks declined on Wednesday as investors assessed fresh tensions in the Middle East that cast doubt on a quick end to the war, and digested the U.S inflation print.

U.S. President Donald Trump warned that Iran had taken too long to negotiate a deal and would now "have to pay the price," while Tehran said it would reassess diplomatic engagement with Washington after overnight tit-for-tat strikes.

The latest escalation is the latest roadblock to a quick peace deal in the Middle East and has reinforced fears that the closure of the Strait of Hormuz could push up oil prices, worsen inflation and dampen the global growth outlook.

U.S. consumer inflation increased at its fastest pace in three years in May, cementing chances that the Federal Reserve keep rates on hold.

The MSCI index of Latin American stocks .MILA00000PUS fell 0.3%, while the corresponding currencies .MILA00000CUS gauge dropped 0.5%.

Markets also shifted their attention to political developments in the region that could trigger sharp moves in Latin American markets.

"For most of the year, investors were focused on global factors, the rate expectations, tariffs, commodity prices etc. But those risks are becoming more familiar, so local political developments now are moving back to the forefront," said Andres Abadia, chief LatAm economist at Pantheon Macroeconomics.

Brazilian President Luiz Inacio Lula da Silva has widened his lead over opposition Senator Flavio Bolsonaro in the run-up to this year’s presidential race, recovering ground after reports linked the right-wing challenger to a disgraced banker, a poll showed on Wednesday.

Leftist Lula would win a potential second-round runoff against Flavio by 44% to 38%, the Quaest poll commissioned by brokerage Genial suggested. In a May poll, Lula had 42% versus Flavio's 41%.

Brazil's benchmark index .BVSP was down 0.6%, with miner Vale's VALE3.SA 1.1% loss weighing heavily. The real BRL= was also down 0.1%.

In Peru, the presidential race remained extremely tight. Leftist Roberto Sanchez held a narrow lead over his conservative rival Keiko Fujimori by just over 40,000 votes, or 50.12% to 49.88% with 96.27% of the vote counted, according to Peru's ONPE electoral authority.

The unexpected close contest has kept the spotlight on the its assets. The local stocks benchmark .MXNUAMPESCPGPE were little changed after logging in its biggest one-day gain since late 2023, while the currency PEN= weakened 0.9%.

Colombia is another nation heading toward a presidential vote. Right-wing lawyer Abelardo De La Espriella will face left-wing candidate Ivan Cepeda on June 21 and the outcome could serve as catalyst for local assets.

Local equities .COLCAP were flat, while the peso COP= firmed against the dollar.

Stocks in Mexico .MXX rose 0.4%, while Chile .SPIPSA fell 0.1%. Mexico's peso MXN= and Chile's peso CLP= strengthened 0.3% and 0.2%, respectively.

Key Latin American stock indexes and currencies at 1431 GMT:

Latin American market prices from Reuters
Equities	Latest	Daily % change
MSCI Emerging Markets .MSCIEF	1669.84	-2.45
MSCI LatAm .MILA00000PUS	2877.97	-0.29
Brazil Bovespa .BVSP	168791.18	-0.6
Mexico IPC .MXX	65668.87	0.4
Chile IPSA .SPIPSA	10487.93	-0.14
Argentina Merval .MERV	3183477.6	1.039
Colombia COLCAP .COLCAP	2252.31	0
Currencies	Latest	Daily % change
Brazil real BRL=	5.1767	-0.1
Mexico peso MXN=	17.3906	0.27
Chile peso CLP=	914.51	0.18
Colombia peso COP=	3568.78	-0.01
Peru sol PEN=	3.419	-0.89
Argentina peso (interbank) ARS=RASL	1438	0.35
Argentina peso (parallel) ARSB=	1435	1.74