* U.S. consumer prices post biggest gain in nearly 12 years * Brazil services activity falls in March, first in 10 months * Dollar gains after four sessions of decline (Adds details, updates prices throughout) By Shreyashi Sanyal and Shashank Nayar May 12 (Reuters) - Colombia"s peso fell on Wednesday as anti-government protests entered their third week, while the Brazilian real led declines among Latin currencies as a larger-than-expected jump in U.S. inflation lifted the dollar. The peso fell 1.1% after union members, students, pensioners and workers took to the streets of Colombia to march in anti-government protests, amid so-far fruitless talks. The oil-exporters currency weakened despite a sharp rise in crude prices, which were on track for eight-week highs on demand hopes. Brazil"s real fell 1.5% after gaining for five consecutive sessions. Services activity fell in March for the first time in 10 months, meaning the sector shrank in the first quarter of the year back to below pre-pandemic levels. Treasury yields rose 3 basis points to 1.65% and the dollar strengthened after U.S. consumer prices increased more than expected in April, leading many to believe inflationary pressures could spur the Federal Reserve into tightening policy earlier than signaled. A weak U.S. labor market has kept the Fed"s stance largely dovish. "We think that most EM currencies will fall a bit further over the rest of this year, in part because we forecast the 10-year U.S. Treasury yield to rise above 2%," said Jonas Goltermann, senior markets economist at Capital Economics. "As a result, we expect yield differentials to generally shift in favor of the dollar, and pressure on the currencies of economies with weaker fiscal and external balance sheets to increase," Goltermann added. The yield-sensitive Mexican peso fell 0.9% even as Mexico"s industrial output rose 0.7% in March from February, the 10th consecutive monthly increase, official data showed. Copper producer Chile"s peso eased 0.7% despite a jump in oil and copper prices. The Peruvian sol rose 0.3% and was the only gainer among its Latin American peers. Opinion polls showed the gap closing between socialist front-runner Pedro Castillo and the right-wing Keiko Fujimori ahead of June 6 presidential elections. Key Latin American stock indexes and currencies at 1927: Stock indexes Latest Daily % change MSCI Emerging Markets 1311.55 -1.32 MSCI LatAm 2444.53 -3.4 Brazil Bovespa 119755.18 -2.61 Mexico IPC 48874.92 -1.57 Chile IPSA 4502.30 -0.85 Argentina MerVal 51218.29 0.243 Colombia COLCAP 1286.92 -0.4 Currencies Latest Daily % change Brazil real 5.3027 -1.50 Mexico peso 20.1628 -1.06 Chile peso 707.2 -0.72 Colombia peso 3747.88 -1.03 Peru sol 3.7158 -0.32 Argentina peso (interbank) 93.9800 -0.02 Argentina peso (parallel) 149 1.34 (Reporting by Shreyashi Sanyal and Shashank Nayar in Bengaluru; Editing by Nick Macfie and Will Dunham)