Updates with mid-session prices

By Nikhil Sharma, Pranav Kashyap and Purvi Agarwal

May 23 (Reuters) - Latin American strengthened against a falling dollar on Friday as investors assessed the impact of U.S. President Donald Trump's latest trade threats on the global economy, which was already grappling with uncertainty due to tariff concerns.

Global markets were convulsed by Trump's statement on Truth Social that he is recommending a 50% tariff on all European Union goods, effective June 1.

This instantly reignited a tariff-centric panic, which had abated in recent weeks with a series of U.S. deals with trading partners, including the United Kingdom and China.

In a separate threat, he targeted smartphone giant Apple AAPL.O, brandishing a 25% tariff if its iPhones are not manufactured in the United States.

Investors were already on edge as markets, especially EMs, continued to wrestle with the long-term fallout of Trump's tax overhaul, a package projected to swell U.S. debt and raise concerns over the world's largest economy's fiscal health.

However, analysts at Citigroup said, "Going forward, tariffs can lead to negative headlines with a market impact, but they will be more benign than earlier as the market now is more confident that a Trump put exists and the U.S. is very much using threats to negotiate."

They still pointed out that uncertainty could hamper new inflows into U.S. assets, potentially leading to a weaker dollar.

The region's currencies made the best from a retreating dollar =USD, which was poised to break a four-week run of gains. FRX/

Brazil's real BRL= jumped 1.2%, its best in ten days, but was set for weekly losses.

Foreign investors took a breather after Brazil on Thursday night retreated from part of the measures announced hours earlier to increase the financial transactions tax on money sent abroad.

The country's finance minister said the revision was made to avoid speculation about discouraging investments.

"It remains unclear how much of these estimates will materialize now that most of these measures have been withdrawn," Dev Ashish, Latin America economist at Societe Generale said.

Moreover, a Brazilian state ruled out an outbreak of bird flu in a commercial chicken farm, amid a wider outbreak that has led to countries banning poultry imports from Brazil.

Sao Paulo's stock index .BVSP was the worst performer among its peers this week, down over 1%, mostly dragged by lower crude prices, but was higher on the day.

On the day, Chile's peso CLP= ticked up 0.3%, also helped by higher copper prices, while its stocks .SPIPSA were 0.2% higher.

Colombia's peso COP= rose 0.7%, and stocks .COLCAP were 0.5% higher, tracking oil prices.

Mexico's currency MXN= strengthened 0.4% and the local bourse .MXX gained 0.6%. Data showed a $83 million trade surplus for the country in April when adjusted for seasonal swings.

The currency is on track for weekly declines as a series of discouraging data releases kept it pressured. The country's inflation spiked outside the central bank's target range for the first time this year, which adds to complexities in Banxico's monetary policy path.

MSCI's index tracking Latam currencies .MILA00000CUS was up 0.1%, while the stocks gauge .MILA00000PUS was up 0.5%.

Elsewhere in EMs, central banks in Ghana and Zambia kept interest rates steady.

Key Latin American stock indexes and currencies:

(Reporting by Nikhil Sharma, Pranav Kashyap and Purvi Agarwal in Bengaluru; Editing by Andrea Ricci and Vijay Kishore)

((Nikhil.Sharma@thomsonreuters.com;))