EMERGING MARKETS-Latam FX, equities tumble on tariff woes; EM stocks index sees worst day since 2008

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 .MSCIEF slumped 8%, led by a steep selloff in heavily weighted Chinese equities. The offshore yuan CNH= fell 0.7%.

An index of Latin American stocks .MILA00000PUS fell 2.8%, down over 9% over the last two sessions, while a gauge of the region's currencies .MIEM00000CUS 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 MXN= 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 PETR4.SA down 3.7%.

Colombia's peso COP= 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:

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

((johann.mcherian@thomsonreuters.com;))