*

Brazil's factory activity downturn resumes in September

*

Brazil's Haddad urges rate cuts

*

Mexico's consumer confidence falls in October

(Updates with afternoon trading)

By Nikhil Sharma and Sukriti Gupta

Nov 4 (Reuters) -

Latin American stocks were mixed on Tuesday, amidst a global sell-off after warnings of a

potential downturn, while currencies slipped as mixed messages from Federal Reserve officials

clouded the policy outlook.

MSCI's index for regional equities fell 1%, in step with global markets

after the CEOs of Morgan Stanley ( MS ) and Goldman Sachs ( GS ) warned of equity market

downturn.

The risk-averse mood comes as the recent tech-fuelled rally shows signs of easing. Wall

Street's main indexes also fell on Tuesday.

"Anytime you get a big risk off, especially if that risk off is global in nature, Latin

America is really going to come under some pressure and that's what you're seeing today," said

Brendan McKenna, international economist at Wells Fargo.

Meanwhile, a parallel index for local currencies slipped 0.7%. In contrast,

the dollar index traded at a three-month high after Fed officials offered competing views

on the economy and risks, while key data remained suspended due to the shutdown.

"Markets are probably primarily responding to a more clouded outlook from the Federal

Reserve....what the Fed is doing is contributing to the kind of correction and risk that we're

seeing today."

The Brazilian real lost 0.8% and the main Bovespa index fell 0.1% after

hitting a record high earlier in the session.

Brazil's industrial production fell in September, matching market expectations and losing

momentum amid high borrowing costs.

The country's central bank is set to announce its next policy decision on Wednesday, with

signals pointing to policymakers keeping rates steady for a prolonged period as they aim to

fight inflation above the target range.

"For the currency, the guidance for the coming months will be interesting. We still think

rate cuts starting early next year are appropriate, but this meeting might come too early to

prepare markets for this," said Michael Pfister, FX analyst at Commerzbank.

However, policymakers also face growing pressures from the government to lower rates, with

Finance Minister Fernando Haddad stating that real interest rates of 10% "make no sense."

In Mexico, the next rate decision is due on Thursday, with growing bets on a quarter-point

cut as inflation slows and the economy weakens.

Fresh data underscored concerns about the economic outlook after the country's consumer

confidence fell in September for the sixth straight month. Mexican equities were up 0.3%

while the peso slid 0.8%.

The Colombian peso fell 0.1%, while the main stock index added 0.6%.

Chile's peso depreciated 0.9% as the world's leading copper producer was hit by

consistent declines in red metal prices. The local stock index dropped 1.9%.

The country is also bracing for a presidential vote. Polls favor the ruling leftist

coalition's candidate, Jeannette Jara, to lead the first round but show her losing a runoff to

either right-wing rival.

In Argentina, stocks fell 0.1%, pulling back after a strong run. The equities had

jumped a record 44.5% last week on the back of a surprise victory for President Javier Milei's

party in midterm elections.

The local peso added 1.6%.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1392.04 -1.3

MSCI LatAm 2561.71 -1.00

Brazil Bovespa 150384.21 -0.05

Mexico IPC 62320.65 0.27

Chile IPSA 9322.9 -1.99

Argentina Merval 3101272.87 -0.10

Colombia COLCAP 1998.52 0.57

Brazil real 5.3978 -0.77

Mexico peso 18.6425 -0.81

Chile peso 946.1 -0.84

Colombia peso 3856.87 -0.06

Peru sol 3.384 -0.27

Argentina peso (interbank) 1454 1.6

Argentina peso (parallel) 1440 -10.06