* Brazil"s real down 0.5% * Most other Latam FX rise as dollar steadies * Petrobras slips after Monday"s surge * Strong Q3, buyback lift EDP Energias do Brasil By Susan Mathew Oct 26 (Reuters) - Brazil"s real slipped on Tuesday as rising inflation raised fears that the continuation of an aggressively hawkish monetary policy stance might choke economic growth, while most other Latin American currencies firmed against a steady dollar. Data on Tuesday showed Brazil"s inflation rose more than expected in the month to mid-October driven by higher fuel and electricity prices - the fastest monthly pace of increase for prices since February 2016. Combined with this are fears that the government could breach its spending limit. "(The data) increases the likelihood of (Brazil"s monetary policy committee) Copom accelerating the hiking pace tomorrow," said strategists at Citi. As per a Reuters poll last week, the benchmark Selic rate is seen being hiked by 100 basis points on Wednesday. The real slipped 0.5%. Economists at Latin America"s largest bank Itau Unibanco warned on Monday that Brazil"s economy is likely to shrink next year as the central bank hikes interest rates amid concerns over more government spending. "In view of the Presidential elections next year, it seems very unlikely that... Bolsonaro will tighten the fiscal policy belt... As a result, the BRL is likely to remain amongst the underperformers of the Emerging Market currencies," said You Na Park-Heger, an FX and EM analyst at Commerzbank. Peru"s sol was marginally lower, extending losses to a fourth straight session. Peru"s opposition-led Congress pushed back a confirmation vote on the country"s new Cabinet until next Thursday, in order to mourn the death of a lawmaker who suddenly died on Monday. Most other Latam currencies gained, with Mexico"s peso hitting a one-month high and Chile"s currency climbing to a three-week peak as the dollar dipped. After rising 2.3% to post its best day in more than two months on Monday, Brazil"s Bovespa stock index fell 0.9% with banks leading losses. Petrobras slipped 0.5% after surging almost 7% on Monday when Brazilian President Jair Bolsonaro reiterated that he is considering privatizing the state-run oil company Petrobras. Energy company EDP Energias do Brasil rose 1.7% after reporting a 70% jump in quarterly earnings from a year ago and approved a shares buyback. Chile"s stocks rose 1.3%, extending gains to a fifth straight session, in line with broader EM peers as well as world stocks. Key Latin American stock indexes and currencies 1334 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1299.91 0.2 MSCI LatAm 2192.72 -0.27 Brazil Bovespa 107623.47 -1 Mexico IPC - - Chile IPSA 4230.55 1.31 Argentina MerVal - - Colombia COLCAP 1400.60 -0.1 Currencies Latest Daily % change Brazil real 5.5810 -0.52 Mexico peso 20.1633 -0.05 Chile peso 808.1 -0.09 Colombia peso 3770.53 -0.16 Peru sol 3.9673 -0.04 Argentina peso 99.5200 -0.03 (interbank) (Reporting by Susan Mathew in Bengaluru;)