By Patricia Vilas Boas

SAO PAULO (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 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)