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Updated at 3:20 p.m ET/ 1920 GMT

By Ankika Biswas and Shashwat Chauhan

Sept 16 (Reuters) - Most Latin American currencies ticked up against the dollar on Monday as global markets awaited the U.S. Federal Reserve's rate verdict later this week, with bets tilted toward an outsized rate cut.

MSCI's Latam currencies index .MILA00000CUS was up 0.5%, hitting a three-week high, with the broader emerging markets currencies gauge .MIEM00000CUS scaling a lifetime high. The regional stocks index .MILA00000PUS also climbed 0.5%.

Both Latam indexes had logged weekly gains on Friday, as expectations grew that the Fed could opt for a bigger 50-basis-point cut when it meets on Sept. 17-18.

Lower U.S. rates could give EM central banks more room for manoeuvre to ease and support domestic growth, barring the volatility and uncertainty around November's U.S. presidential election. Latin American countries are some of the major EMs that have already started a rate-cut cycle before the Fed.

Brazil's real BRL= strengthened 0.9% against the dollar to a near three-week high, with investors awaiting a likely local rate hike and inflation data later in the week.

"In the last few weeks, inflation expectations have been continuously worsening among investors," StoneX analysts noted.

"Such a scenario of discomfort will likely result in a 0.25 pp (percentage point) increase in the Selic rate, which, in turn, should improve the outlook for the Brazilian interest rate differential compared to other economies."

Mexico's peso MXN= slipped 0.4%, set to snap a three-day winning streak. The local equity market was closed on account of Independence Day.

Mexico's judicial reform overhauling the country's courts, which will allow voters to elect judges, officially took effect on Sunday.

Chile's peso CLP= rose 0.5% against the dollar, boosted by strong copper prices, while Colombia's peso COP= dropped 1.2%.

Peru's sol PEN= edged up 0.1%. Data showed Peru's economy expanded for the fourth month in a row in July fueled by all sectors except agriculture, continuing the country's recovery following a recession last year.

In Argentina, President Javier Milei said during a presentation to Congress on Sunday on the 2025 budget that he would defend his government's commitment to maintaining fiscal balance and veto all bills that threaten it.

Meanwhile, data from a banking trade group showed foreign investors ploughed a net $30.9 billion into EM stocks and debt portfolios in August.

HIGHLIGHTS

** Petrobras' new strategic plan to have greater focus on oil and gas, CFO says

** Israel shekel and shares slide on talk, denied by PM, that Netanyahu may sack defence minister

Key Latin American stock indexes and currencies:

(Reporting by Ankika Biswas and Shashwat Chauhan in Bengaluru; Editing by Ken Ferris)

((Ankika.Biswas@thomsonreuters.com; Shashwat.Chauhan@thomsonreuters.com))