By Medha Singh

June 19 (Reuters) - Latin American currencies ticked lower for a second straight session on Thursday in cautious holiday-thinned trading as the Iran and Israel conflict showed no signs of abating, overshadowing a day packed with central bank meetings.

Israel bombed nuclear targets in Iran, Iranian missiles hit an Israeli hospital overnight and U.S. President Donald Trump kept the world guessing about whether Israel's superpower ally would join it in airstrikes.

Israel's shekel ILS= dipped 0.4% while Tel Aviv's blue-chip index .TA125 hit a fresh record high.

MSCI's index for Latin American currencies .MILA00000CUS fell 0.2%, but remained not far from an all-time high hit on Tuesday. Markets in Brazil, the region's biggest economy, were shut for a holiday.

Latin American currencies have emerged as top performers among emerging markets this year, driven by attractive valuations, a weakening global dollar, and limited fallout from Trump-era tariff policies.

"Even with rising geopolitical risks and some underperformance over the past week, on average, EM currencies are still marginally stronger versus the dollar month-to-date," strategists at Goldman Sachs said in a note.

"We think both EM carry and select Asia low-yielders will continue to perform well. Still, a larger and more prolonged oil price shock could challenge these positions."

Mexico's peso MXN= dipped 0.3% as a preliminary estimate from the national statistics agency showed the country's economy likely contracted 0.3% in May from the same month a year earlier.

Meanwhile, investors were tracking Hurricane Erick, which strengthened into a category four hurricane as it approached Mexico's Pacific coast. Erick might trigger a partial payout on the government of Mexico's parametric cat bond, ILS investment manager Icosa said in a LinkedIn post.

The World Bank issued a parametric catastrophe bond for Mexico in 2024 covering $175 million of Pacific hurricane risks.

Colombia's peso COP= eased 0.3% to hit a near two-month low at 947.16.

A Colombian high court on Wednesday suspended a decree by President Gustavo Petro that sought to call a controversial referendum on his proposed labor reform, the latest setback for Petro's beleaguered effort to broadly expand worker benefits.

Elsewhere, the Turkish lira TRYTOM= eased 0.4% after the country's central bank held its key interest rate steady at 46%, as expected and also kept the upper band of its rate corridor at 49% despite predictions it would be lowered.

A day earlier Brazil's central bank decided unanimously to lift the benchmark Selic rate to 15%, marking a seventh consecutive hike amid unanchored inflation expectations and resilient activity.

The real BRL= had hit its highest in eight months at 5.465 per dollar on Tuesday.

The Argentine peso's ARS= 1.3% drop was sharper than its peers, while the Chilean peso CLP= shed 0.4%.

Next Tuesday MSCI will put out its decision on whether the country will move to its "Emerging Market" index from "Frontier Market" currently, a decision that could spur capital flows into the region.

The Peruvian sol PEN= was in a bright spot, rising 0.2% to fetch 3.585 per dollar.

Stock markets in the region were mixed with the benchmark index in Mexico .MXX down 0.4%, while those in Chile .SPIPSA, Colombia .COLCAP and Argentina .MERV edged higher.

Key Latin American stock indexes and currencies at 1623 GMT:

(Reporting by Medha Singh in Bengaluru; Editing by Andrea Ricci)

((Medha.Singh@thomsonreuters.com; +91 80 6210 0592; X, formerly Twitter: @medhasinghs;))