* Brazilian bank stocks fall on mortgage concerns * Chile"s peso sole gainer in Latin America * Iron ore weakness weighs on Brazil"s real By Ambar Warrick Oct 18 (Reuters) - Most Latin American currencies fell on Monday as concerns over slowing Chinese economic growth and rising inflation rattled sentiment, with Brazil"s real falling the most as iron ore markets were dented by a coal shortage. The real dropped 1.4%, with coal shortages in China brewing concerns over demand for steel-making materials. Brazil is a major exporter of those materials. Data last week had also shown that economic activity in Latin America"s largest economy fell more than expected in August, with surging inflation to blame. "Although headline inflation likely peaked in September, upward pressures will remain in the coming months, posing a key risk for 2022 growth," analysts at TS Lombard wrote in a note. "The expected economic slowdown in China creates additional risks for the Brazilian economy, whose dependence on China has skyrocketed in recent years and continues to grow." Brazil"s Bovespa stock index fell more than 1%, with iron ore miner Vale among the top drags. Major banks, including Itau Unibanco, B3 SA Brasil Bolsa Balcao and Banco BTG Pactual slid between 1% to 4% after the central bank said banks" mortgage portfolios required some attention, as loan defaults have increased recently. Concerns over China"s economic health hit broader Latin American (Latam) markets as well, given the region"s high dependence on the Asian nation as an export destination. Data showed China"s economy grew at its slowest pace in a year, hit by a power crunch and a faltering property sector. Expectations of rising inflation sent U.S. Treasury yields and the dollar higher, as investors priced in monetary policy tightening by the Federal Reserve by as soon as next month. Higher lending rates in the developed world tend to make riskier assets appear less attractive. Broader emerging markets have fallen in recent weeks after hawkish signals from the U.S. central bank. Still, most Latin American central banks have begun steep interest rate hike cycles to offset the impact of high inflation. Oil exporter Mexico"s peso dropped 0.4% despite rising oil prices, as weak global sentiment made investors avoid the currency for carry trade. Chile"s peso rose 0.3% and was the sole gainer in Latin America, benefiting from higher copper prices on signs of extremely tight supply in the London Metal Exchange (LME) system. Most Latin American stocks fell, with MSCI"s Latam stocks index down more than 1%. Colombian markets were closed for a holiday. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1281.45 -0.17 MSCI LatAm 2254.64 -1.82 Brazil Bovespa 113279.22 -1.19 Mexico IPC - - Chile IPSA 3988.26 0.15 Argentina MerVal - - Currencies Latest Daily % change Brazil real 5.5324 -1.43 Mexico peso 20.3998 -0.35 Chile peso 821.3 0.26 Peru sol 3.9213 0.00 Argentina peso 99.2800 -0.09 (interbank) (Reporting by Ambar Warrick Editing by Paul Simao) Our Standards: The Thomson Reuters Trust Principles.