* Credit conditions in Brazil improved in March- C.bank * Treasury yields hit 2-week high * Tax reform protests hurt Colombian peso * Disapproval over Chilean President seen growing (Adds detail on Brazil debt, Mexican stocks, updates prices) By Shashank Nayar and Ambar Warrick April 29 (Reuters) - Latin American currencies fell on Thursday as a jump in U.S. Treasury yields and a stronger dollar outweighed strength in commodity prices, while regional stocks hovered around three-month highs. Mexico"s peso dropped 0.7%, while Chile"s peso shed 1.7%, leading losses across Latam despite expectations of improving demand pushing up oil and copper prices. Chile"s peso dropped as a survey showed 74% disapproval of Chilean President Sebastián Piñera"s management in April when his government opposed a new pension withdrawal scheme to mitigate the impact of the coronavirus pandemic. U.S Treasury yields hit two-week highs, pressuring high-risk high-yield currencies after U.S. President Joe Biden late on Wednesday proposed trillions of dollars in new spending, and data showed U.S. economic growth accelerated in the first quarter. Investors expect U.S. inflation to spike on the new spending measures. "There doesn"t seem to be a clear rational driving the currency movements and it seems like the markets are cutting straws a little bit," said Christian Lawrence, senior market strategist at Rabobank. "The Mexican peso generally drops when benchmark U.S. yield rises, which seems to be the case, but we don"t see investor risk appetite being much affected." Latam currencies had rallied to three-month highs on Wednesday after dovish signals from the Federal Reserve made higher yielding assets more attractive. Brazil"s real was flat after jumping to its highest point since mid-February in the previous session. Credit conditions in Brazil improved in March, central bank figures showed, while the Treasury also slashed its 2021 debt forecast to 87.2% of gross domestic product from 96.7%. Public debt levels have surged to record highs in the country, straining government finances as a damaging wave of COVID-19 infections prompted more spending. Colombia"s peso fell 0.5% as thousands of Colombians took to the streets to protest against a controversial tax reform proposal. Latam stocks were muted, with the MSCI"s index of regional stocks trading flat around three-month highs. Mexico"s bourse surged 0.8%, pushed up by heavyweight cement maker Cemex after it reported a more than 15-fold jump in first-quarter profit. Shares of Brazilian retailer B2W rose 6.3%, while those of its peer Lojas Americanas SA fell 5.3% after they announced a deal under which Lojas will transfer its assets to B2W. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1365.38 0.03 MSCI LatAm 2434.47 0.02 Brazil Bovespa 120337.21 -0.59 Mexico IPC 48872.18 0.79 Chile IPSA 4536.57 -1.08 Argentina MerVal 50069.92 0.052 Colombia COLCAP 1277.09 -0.71 Currencies Latest Daily % change Brazil real 5.3532 0.13 Mexico peso 20.0395 -0.69 Chile peso 707.8 -1.67 Colombia peso 3713.23 -0.51 Peru sol 3.7848 -0.43 Argentina peso 93.4900 -0.05 (interbank) (Reporting by Shashank Nayar in Bengaluru Editing by Marguerita Choy and Richard Chang)