* Annual inflation in Brazil jumps to highest since 2016 in April * Chile"s economy will grow 12% in the second quarter - poll * Mexico expected to leave rates unchanged on Thursday (Adds comments, updates prices throughout) By Shreyashi Sanyal and Shashank Nayar May 11 (Reuters) - Brazil"s real steadied after a fall on Tuesday following a dovish tone struck by minutes of the central bank"s recent meeting, while fears of a spike in U.S. inflation knocked down emerging market stocks. Brazil"s real edged 0.1% higher after dropping nearly 1%, while the MSCI"s index of Latam currencies fell 0.2%. Minutes from the Brazilian central bank"s last policy meeting showed the bank expects to sharply hike interest rates at its next meeting to check inflation, but suggested it is unlikely to make an uninterrupted cycle of hikes to a "neutral" level. The minutes disappointed investors who were hoping for the bank to aggressively hike rates to reduce inflationary pressures next year. Anticipation of this had spurred gains in the real. Official figures showed annual inflation in Brazil rose to 6.8% in April, the highest since 2016, driven by higher healthcare and pharmaceutical goods prices as well as a rise in food and drink costs. "The breakdown of the data provides reason to think that the headline rate will fall sharply in the second half of the year," said William Jackson, chief emerging markets economist at Capital Economics. "We think that will allow Copom (Brazilian central bank"s rate-setting committee) to bring its tightening cycle to an end sooner than most currently expect." The Peruvian sol rose 0.6%, extending gains after recording its best day in more than five years. Opinion polls showed the gap closing between socialist front-runner Pedro Castillo and the right-wing Keiko Fujimori ahead of the June 6 presidential elections. Most other commodity-focussed Latin American currencies, including the Chilean, Mexican and Colombian pesos fell 0.2% and 0.8%. Mexico"s central bank will likely keep its benchmark interest rate unchanged at its next monetary policy meeting on Thursday, as inflation surges well above target during an economic recovery from the COVID-19 pandemic, a Reuters poll showed. Chile"s economy will grow 12% in the second quarter, a Central Bank poll forecast showed on Tuesday, while economic activity in world"s top copper producer is set to soar 9.5% in April alone, the poll of analysts said. The MSCI"s index for emerging market stocks fell 1.4%, taking cues from its developed counterparts as investors worried that a substantially higher-than-expected U.S. inflation reading on Wednesday could push the Federal Reserve to taper its massive stimulus measures. Key Latin American stock indexes and currencies at 1949 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1328.54 -1.32 MSCI LatAm 2524.91 -0.05 Brazil Bovespa 122591.59 0.56 Mexico IPC 49518.16 -0.7 Chile IPSA 4519.57 -1.63 Argentina MerVal 51143.58 -1.172 Colombia COLCAP 1289.02 -1.73 Currencies Latest Daily % change Brazil real 5.2270 0.09 Mexico peso 19.9685 -0.23 Chile peso 702 -0.73 Colombia peso 3709.38 -0.14 Peru sol 3.704 0.45 Argentina peso (interbank) 93.9500 -0.02 Argentina peso (parallel) 148 2.70 (Reporting by Shreyashi Sanyal and Shashank Nayar in Bengaluru Editing by Alistair Bell) Our Standards: The Thomson Reuters Trust Principles.