(Updated at 10:30 a.m. ET/ 1430 GMT)

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Mexico's peso hits 20 per dollar for the first time since

Aug. 5

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Markets still see chance of 50 bp Fed rate cut

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Latam FX index down 0.3%, stocks down 0.1%

By Shashwat Chauhan

Sept 5 (Reuters) - Most Latin American currencies perked

up against a softer dollar on Thursday, as bets of an outsized

interest rate cut by the Federal Reserve this month remained

firm, while Mexico's peso lagged on lingering concerns about a

judicial reform.

The dollar remained under pressure globally after data

showed U.S. private employers hired the fewest number of workers

in 3-1/2 years in August and data for the prior month was

revised lower, potentially hinting at a sharp labor market

slowdown.

"Tomorrow's payroll report could be softer than expected

given the slowdown in ADP estimates," said Jeffrey Roach, chief

economist at LPL Financial.

"If the payroll report surprises investors and comes in

weaker than expected, the likelihood of a 50 basis point cut

increases at the upcoming Fed meeting."

Due on Friday, the August report for U.S. nonfarm payrolls

could be key in gauging the size of potential rate cuts, given

the Fed's recent emphasis on labor market conditions.

Though market bets still favor a 25 basis point rate cut

from the U.S. central bank this month, traders see about a 40%

chance of a 50 bps cut, as per the CME FedWatch Tool.

Brazil's real led gains in the region, adding 0.4%,

while Colombia's peso also appreciated 0.2%.

Chile's peso added 0.4% after falling for the last

four sessions, while Peru's sol was down 0.5% in light

trading.

Also aiding gains were elevated commodity prices, as prices

of crude oil and copper, some of the region's top exports,

advanced.

Mexico's peso was an outlier, down 0.3% to 19.989,

briefly touching the 20-unit barrier for the first time in over

a month earlier in the day, as jitters persisted after the lower

house of Congress approved an overhaul of the country's

judiciary early on Wednesday that would usher in a new era of

elections for all judges.

The reform will be now be debated in the Senate next week,

and is expected to be enacted later in September, if passed.

A Reuters poll of FX strategists showed Brazil's real will

continue to be restrained by worries about the fiscal situation

in the near future despite an expected boost from a widely

anticipated first interest rate cut by the U.S. Federal Reserve

later this month.

MSCI's index for Latin American currencies

was down 0.3%, while a gauge for stocks slipped

0.1%.

Local bourses were broadly up, with heavyweight Brazil's

Bovespa up 0.1%.

HIGHLIGHTS

** World Bank, French Development Agency give Uganda aid of

over $600 mln

** Venezuela's oil exports climb to four-year high in August

** Brazil's auto production up, sales down in August

Key Latin American stock indexes and currencies:

Equities Latest Daily % change

MSCI Emerging Markets 1076.55 0.28

MSCI LatAm 2223.8 -0.15

Brazil Bovespa 136274.5 0.12

Mexico IPC 52081.17 0.52

Chile IPSA 6391.72 0.04

Argentina Merval 1828842.6 1.777

4

Colombia COLCAP 1341.12 0.37

Currencies Latest Daily % change

Brazil real 5.6179 0.39

Mexico peso 19.989 -0.32

Chile peso 939.4 0.35

Colombia peso 4172.15 0.16

Peru sol 3.7915 -0.54

Argentina peso (interbank) 953.5 0

Argentina peso (parallel) 1270 2.755905512