*
      MSCI Latam stocks index off 2.8%, EM stocks down 8%


        *
      Mexico would like to avoid imposing reciprocal tariffs on
U.S.


        *
      Trump threatens additional tariffs on China


        *
      Frontier market hard currency bonds drop



 (Updates through later afternoon trade)
    By Johann M Cherian and Lisa Pauline Mattackal
       April 7 (Reuters) - Emerging market currencies and bonds
joined a global risk-asset selloff on Monday, with an index
tracking stocks recording its worst day since the 2008 financial
crisis, on worries that U.S. President Donald Trump's firm
stance on sweeping tariffs could damage the global economy.
    A global trade war escalated further, as Trump threatened to
impose an additional 50% tariff on Chinese goods starting on
April 9, and the European Union proposed counter tariffs on the
U.S.
    MSCI's emerging market stock index slumped 8%, led
by a steep selloff in heavily weighted Chinese equities. The
offshore yuan fell 0.7%.
    An index of Latin American stocks fell 2.8%,
down over 9% over the last two sessions, while a gauge of the
region's currencies lost 1.3%.
    Meanwhile, dollar bonds issued by emerging market countries
fell broadly, with debt from smaller, riskier, markets such as
Pakistan, Angola and El Salvador seeing some of the steepest
losses.

    Volatility was high as investors digested a barrage of
headlines, including the White House denying a report that Trump
is considering a 90-day pause in tariffs for all countries
except China, which had briefly caused markets to pare losses.
    Most global risk assets have sold off sharply in the days
following Trump's April 2 reciprocal tariff announcement, with
focus now on how other countries will respond and how
negotiations with the U.S. unfold.
    "Trump's waiting for the other sides to come up with a plan
... one (possible) route is that we see Trump focus on those
(countries) that are retaliating first, so then before we get
anything good, we get something worse," said Benjamin Ford,
strategist at Macro Hive.
    Mexico's President Claudia Sheinbaum said her government
would like to avoid imposing reciprocal tariffs on the U.S.,
though she said it could not be ruled out. Mexico's peso
lost 1.3%.
    Latin America's commodity-sensitive stocks and currencies
lost ground as energy and metal prices were hit on worries about
a slowing economy depressing demand.
    Still, assets in Latin America have witnessed more moderate
declines as U.S. tariffs on the region have been lower than
those imposed on other emerging market economies.
    "While there are no outright winners in a trade war, Latin
America appears relatively insulated," said Alejo Czerwonko,
CIO, emerging markets Americas, UBS Global Wealth Management.
    Stocks of Latin American commodity companies fell, with
Brazil's Petrobras down 3.7%.
    Colombia's peso led regional currency losses, down
2.5% at an over three-month low.
    Chile's central bank said the only plausible option at its
March meeting was keeping the benchmark interest rate on hold at
5% due to risks facing the inflationary outlook.

    HIGHLIGHTS
    ** Trump leaves emerging market central banks with no clean
choices
    ** China sovereign fund steps in to support stocks plunging
on trade war
    ** Argentina's zombie mortgage market is coming back to life
    ** Poland's bourse halts trading on all markets

    Key Latin American stock indexes and currencies at 2000 GMT:

 Equities                    Latest     Daily %
                                        change
 MSCI Emerging Markets         1000.85      -7.98

 MSCI LatAm                    1925.18      -2.84
 Brazil Bovespa              125437.48      -1.43
 Mexico IPC                   50525.09       -1.8
 Chile IPSA                    7252.25      -3.36
 Argentina Merval            2027481.5     -3.811
                                     6
 Colombia COLCAP               1609.66      -0.67

 Currencies                  Latest     Daily %
                                        change
 Brazil real                     5.908      -1.12
 Mexico peso                    20.678      -1.28
 Chile peso                     988.85      -0.96
 Colombia peso                  4382.6      -2.45
 Peru sol                       3.7143      -1.03
 Argentina peso (interbank)       1075  -0.116279
                                               07
 Argentina peso (parallel)        1325  -1.132075
                                              472




 (Reporting by Johann M Cherian in Bengaluru; Editing by
Alistair Bell and Shinjini Ganguli)