* Brazil"s real leads declines among Latam FX * Chilean peso rises with higher copper prices * Argentine stocks hit over two-week highs (Adds comments, bullets; Updates prices throughout) By Shreyashi Sanyal March 15 (Reuters) - Brazil"s real underperformed broader emerging market peers on Monday, after its best week in more than three months, with eyes on a central bank meeting where surging inflation is expected to force a rate hike. The real fell 1.3% to 5.631 per dollar after gaining 2.5% last week. On the year, the currency is one of the worst-performing among emerging market peers, down nearly 8% compared with a 0.6% slip in the broader EM index . "Prospects for the Brazilian real suffered from a surprise Supreme Court decision to overturn the conviction of former President Lula da Silva," said Alejo Czerwonko, chief investment officer, emerging markets Americas at UBS. Czerwonko said this combined with current Brazilian President Jair Bolsonaro"s push for more fiscal spending to appeal to voters would increase the already high level of fiscal risk in the country and advised investors to remain on the sidelines while investing in the real. Brazil"s expected inflation for 2021 shot up to a new high of 4.6%, a central bank survey showed, significantly above the bank"s year-end target of 3.75%. Rising inflation, deepening fiscal uncertainty and a weak exchange rate could see a 50 basis point increase in interest rates on Wednesday, a Reuters poll showed. The hike would be the first in six years. The bank sold 10,000 foreign exchange swaps contracts at auction on Monday, continuing its intervention to support the currency. Meanwhile, Bolsonaro is weighing candidates to replace Health Minister Eduardo Pazuello, sources said, in what would be the fourth person in a year in the role as COVID-19 cases rage out of control. As the dollar strengthened, EM currencies trimmed gains, with some moving into the red. Mexico"s peso rose, while copper producer Chile"s peso tracked prices of the red metal higher. The Chilean peso is among the best performing Latam currency year-to-date thanks to copper prices hitting decade highs. Colombia"s peso extended losses to a third straight session as crude prices declined. Focus this week will be on the U.S. Federal Reserve"s rate decision on Wednesday as well as the first meeting between Washington and Beijing since U.S. President Joe Biden took office. Latam stocks rallied, with Argentine shares in the lead, up 2.9% to hit over two-week highs. Key Latin American stock indexes and currencies at 1916 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1340.60 -0.56 MSCI LatAm 2299.41 -0.29 Brazil Bovespa 114652.22 0.43 Mexico IPC 47769.87 0.2 Chile IPSA 4913.94 0.4 Argentina MerVal 50501.83 2.916 Colombia COLCAP 1357.59 0.29 Currencies Latest Daily % change Brazil real 5.6311 -1.29 Mexico peso 20.6694 0.27 Chile peso 722.4 0.18 Colombia peso 3557.72 0.44 Peru sol 3.7027 0.16 Argentina peso (interbank) 91.0600 -0.22 Argentina peso (parallel) 143 -0.70 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru; Editing by Marguerita Choy)