* Latam stocks set for worst day since late February * Chilean election results likely market positive- GS * Strong economic data limits MXN losses * EMFX at 3-month low, stocks slump 1.9% (Updates prices) By Ambar Warrick and Susan Mathew July 19 (Reuters) - Brazil"s real sank 2% on Monday, leading losses across Latin American currencies on rising inflation expectations, while Chile"s main stock index rose after moderate candidates emerged as major presidential contenders. MSCI"s index of Latin American currencies dropped 2.2% and headed for its worst day in 10 months, as rising coronavirus cases led to a sell-off in risk assets across the globe on worries infections would slow down a nascent economic recovery. Emerging market stocks slumped 1.9% and were set for their worst day in four months, while currencies hit near a three-month low, down 0.6%. An index of Latam stocks slumped 4.1%, heading for their worst day in nearly five months, tracking a broader sell off. The real fell to 5.23 against the dollar as a weekly central bank survey showed expectations for 2021 Brazilian inflation spiked up to 6.3%, well above the central bank"s year-end goal of 3.75% and more than a percentage point above the 5.25% upper limit of its wider range. While investors also penciled in more interest rate hikes by the central bank to counter the rise in prices fueled by accelerating growth and easing of COVID-19 restrictions, a significant jump in inflation could hurt Brazil"s economic recovery by denting consumer spending. "Rising CPI inflation penalizes, above all, the poorest households, eroding the purchasing power of emergency aid," analysts at TS Lombard wrote in a note. "Banco Central will likely front-load rate hikes amid rising inflationary pressures." The world"s two largest copper producers Chile and Peru saw their currencies drop as copper prices slid on demand doubts and a strong dollar, with Chile"s peso erasing early gains to hit its lowest nearly eight months. But Santiago-listed stocks bucked the trend, rallying 1.5%, as results of nominating contests for November"s presidential election saw leftist former student leader Gabriel Boric and center-right independent Sebastian Sichel finish strongly. While both were surprise picks, they were viewed as being more moderate than other contenders. "The outcome of the primaries will likely be perceived as moderately market positive," Goldman Sachs analysts wrote, noting a defeat in the left-wing primary of an early communist party favorite and Sichel"s reformist views. Mexico"s peso fell 0.7%, but data that showed the country"s economy surged by nearly 15% in June, provided some optimism about recovery from a pandemic-induced slump. Colombia"s peso fell 0.5%, extending losses to a third straight session, tracking declines in oil prices. Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1315.01 -1.87 MSCI LatAm 2477.00 -3.96 Brazil Bovespa 123739.78 -1.76 Mexico IPC 48885.04 -2.52 Chile IPSA 4214.24 1.47 Argentina MerVal 62349.41 -1.175 Colombia COLCAP 1245.67 -2.11 Currencies Latest Daily % change Brazil real 5.2333 -2.24 Mexico peso 20.0460 -0.85 Chile peso 759.8 -0.30 Colombia peso 3838.07 -0.64 Peru sol 3.9441 -1.04 Argentina peso 96.3000 -0.08 (interbank) (Reporting by Ambar Warrick and Susan Mathew in Bengaluru; Editing by Tomasz Janowski and Grant McCool)