* Mexican c.bank keeps rate flat as inflation expectations rise * Investors pricing in tightening cycle by year end - analyst * Brazil economic activity slows less than expected in March * Chilean, Peruvian central bank statements eyed (Adds comments, updates prices throughout) By Shreyashi Sanyal and Shashank Nayar May 13 (Reuters) - Mexico"s peso rose on Thursday after the country"s central bank held its key interest rate steady, while most other currencies in Latin America rebounded from steep losses in the prior session. The peso rose 1.2% as the Mexican central bank, locally known as Banxico kept the rate unchanged at 4.0%, as expected, after cutting by 25 basis points in February, but its five-member board reflected growing concerns about the path of inflation. "Having closed the door to further easing at the last meeting, today"s decision was never really in doubt," said William Jackson, chief emerging markets economist at Capital Economics. "Investors, in contrast, are pricing in the start of a tightening cycle by the end of the year." Analysts at TD Securities say the communication from Banxico follows on from the March meeting"s incremental "hawkishness". Brazil"s real edged higher, as economic activity in March recorded a smaller decline than economists had expected, implying that first quarter economic growth rose 2.3% despite a second wave of COVID-19 infections. Following the upbeat data, economists at Barclays, Goldman Sachs and Credit Suisse were among those who raised their gross domestic product growth forecasts for 2021 to at least 4% for Brazil. Citi also increased its holding of Brazil U.S. dollar sovereign bonds to an overweight position, citing a window of opportunity before elections in October 2022. The real and most other Latam currencies fell on Wednesday after a jump in U.S. inflation raised concerns the Federal Reserve would bring forward its timeline for tightening policy. But a sluggish labor market recovery has seen the Fed exude largely dovish signals, even as data showed fewer Americans filed new claims for unemployment benefits last week, beating economist forecasts. The Chilean peso held steady, while the Peruvian sol gained 1.7% ahead of their respective central bank meetings later in the day. The Argentine peso was flat as inflation likely eased slightly to around 3.8% in April, a Reuters poll of analysts showed, coming off a peak the month earlier that was its highest since 2019, as the South American country battles to rein in rising prices.. Colombia"s peso gained 0.8%, after marking its worst day in more than a week as rising social unrest due to anti-government protests sullied the country"s economic outlook. Key Latin American stock indexes and currencies at 2015 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1292.63 -1.72 MSCI LatAm 2458.45 -0.38 Brazil Bovespa 120836.80 0.94 Mexico IPC 48809.63 0.13 Chile IPSA 4443.72 -0.94 Argentina MerVal 52603.77 3.104 Colombia COLCAP 1262.29 -1.79 Currencies Latest Daily % change Brazil real 5.3061 0.10 Mexico peso 19.9260 1.15 Chile peso 707.1 0.10 Colombia peso 3718.48 0.79 Peru sol 3.6577 1.59 Argentina peso (interbank) 94.0100 -0.02 Argentina peso (parallel) 148 2.70 (Reporting by Shreyashi Sanyal and Shashank Nayar in Bengaluru; editing by Barbara Lewis and Diane Craft) Our Standards: The Thomson Reuters Trust Principles.