By Patricia Vilas Boas

SAO PAULO, June 6 (Reuters) - Latin American e-commerce

giant MercadoLibre ( MELI ) is expanding free shipping in its

main market Brazil, it said on Friday, a move expected to be

costly but which the company hopes will drive sales higher amid

fierce competition.

MercadoLibre ( MELI ), Latin's America most valuable company by

market cap, earns more than 50% of its e-commerce revenues in

Brazil, where it competes with Amazon ( AMZN ) and Sea's

Shopee, and more recently with players like Temu.

MercadoLibre ( MELI ) said sales of 19 reais ($3.40) or more are now

exempt from shipping fees in Brazil, from a minimum of 79 reais

($14.15) previously.

"Practically the entire site will have free shipping from

now on," the head of MercadoLibre's ( MELI ) e-commerce operations in

Brazil, Fernando Yunes, told journalists.

He said the financial impact will be absorbed by the

company, although he did not give an estimate on the scale of

the costs of the expanded free shipping.

MercadoLibre ( MELI ) confirmed it has been cutting shipping costs

for the companies and people selling on its platform in Brazil

by up to 40% since late May, a move that had been noted by

analysts.

"The increased shipping discount targets a price range of

products close to where Shopee seems to be gaining traction,"

analysts at Itau BBA said in a May 22 report to clients.

($1 = 5.5845 reais)