*

Mexico inflation slows in first half of December

*

Brazil posts $3.1 billion current account deficit in

November

*

Latam stocks index down 1.7%, FX down 1.2%

(Updates with afternoon trading levels)

By Lisa Pauline Mattackal

Dec 23 (Reuters) - Most Latin American stock indexes and

currencies slipped on Monday, giving back gains from the

previous session as investors questioned the likely path of U.S.

interest rates and the impact on emerging markets next year.

MSCI's index of Latin American currencies

was down 1.2%, and a gauge of regional stocks

lost 1.7% at the start of a holiday-shortened week.

Both indexes had gained over 1% on Friday after moderate

U.S. inflation data helped relieve some concerns over higher-for

-longer rates in the world's largest economy.

However, Monday saw the dollar and U.S. Treasury

yields tick higher, with lower oil prices adding to pressure on

Latin American assets.

The real fell 1.7% against the dollar, giving up

gains from Friday when central bank intervention helped the

currency pick up off record lows. Brazil posted a $3.1 billion

current account deficit in November, narrower than forecast.

Mexico's peso dipped 0.8%. Data showed annual

inflation slowed to 4.44% in the first half of December,

boosting bets the Bank of Mexico will continue cutting rates in

2025.

With little major data expected and trading light ahead of

the Christmas holiday, most attention was on the outlook for

next year.

Investors were rattled last week by the U.S. Federal

Reserve's projection of a more measured pace of rate cuts next

year than previously expected. That sparked a selloff in risk

assets.

"Going forward, the Fed is likely to slow-walk further rate

cuts as it feels its way toward a neutral setting, though it's

likely to err on the tighter side of neutral given the ongoing

risk of inflation reacceleration," said Jason Pride, chief of

investment strategy and research at Glenmede.

After a volatile 2024, a slower pace of U.S. rate cuts will

likely be a headwind for emerging markets in 2025, with a

stronger dollar and higher than originally forecast rates likely

to weigh on currencies and add to inflationary pressures.

The Latin American stocks index has lost nearly 30% this

year, on track for its worst year since 2015.

The currency index has lost close to 10% year-to-date, set for

its worst year since 2020.

The potential for international tariffs planned by

President-elect Donald Trump's incoming administration, and

continued uncertainties about top-consumer China's economy, are

also hurdles for Latin America's resource-rich economies.

Mexican President Claudia Sheinbaum expressed support for

Panama's government after Trump threatened to reassert U.S.

control over the Panama Canal on Sunday.

The International Monetary Fund said it had completed two

reviews for Paraguay that will allow for the immediate

disbursement of around $245 million under the Resilience and

Sustainability Facility arrangement.

HIGHLIGHTS

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reached with IMF, memo shows

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approval

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1081.8 0.89

MSCI LatAm 1876.79 -1.73

Brazil Bovespa 121232.15 -0.71

Mexico IPC 49242.29 -0.69

Chile IPSA 6665.3 -0.53

Argentina Merval 2484391.6 0.682

1

Colombia COLCAP 1374.99 0.5

Brazil real 6.1904 -1.73

Mexico peso 20.213 -0.81

Chile peso 990.9 -0.24

Colombia peso 4407.5 -0.46

Peru sol 3.723 0.16

Argentina peso 1025.5 -0.292540224

(interbank)

Argentina peso (parallel) 1180 -1.694915254