*

Chile's peso on track to outperform in May

*

Mexican elections on Sunday

*

Brazil's real hits six-week low

(Updated at 3:22 p.m. ET/ 1922 GMT)

By Sruthi Shankar and Shashwat Chauhan

May 31 (Reuters) - Most Latin American currencies rose

on Friday as the dollar weakened after a U.S. inflation reading

supported expectations of interest rate cuts from the Federal

Reserve, while Mexico's peso edged higher in the lead-up to

presidential elections.

The dollar weakened after data showed U.S. inflation rose in

line with market expectations in April. The futures market

continued to price in one U.S. rate cut of 25 basis points this

year following the data.

Peru's sol and Chilean peso rose 0.5% and

0.1%, respectively, while Colombia's peso held steady at

3865 per dollar.

Focus would remain on Mexico, with the peso

appreciating 0.3% to 16.97 per dollar after falling for the last

three sessions, though on track for a weekly decline.

In Mexico, the presidential candidate for ruling party

MORENA, Claudia Sheinbaum, is almost universally expected to win

on Sunday, but some traders say prospects of a ruling party

congressional supermajority could be pressuring the peso.

A two-thirds majority would allow them to push through

constitutional reforms pitched by President Andres Manuel Lopez

Obrador, including energy sector reforms that are unpopular with

markets.

"A scenario where MORENA wins the presidency but does not

gain outright majority in Congress is good for the peso as it

reduces the chances of radical reforms," TD Securities

strategists noted.

"Historically, MXN has weakened in the days leading up

to the presidential election and strengthened vs EM peers once

the results are known and uncertainty is resolved."

Mexico's IPC index gained 0.4%, while other stock

markets in the region were also mostly lower.

The Brazilian real fell almost 1% after a local

holiday on Thursday, trading near its weakest level in six weeks

against the dollar.

Keeping in mind Friday's moves, most Latin American

currencies were on track for monthly advances, with copper

producer Chile's currency set to outperform as prices of the red

metal rallied in May amid demand hopes from top consumer China.

HIGHLIGHTS

** Brazil is not planning to change inflation target, Haddad

says

** Codelco and SQM ink pact set to reshape Chile's lithium

sector

** Peru to log April growth as recession exit underway,

minister says

Key Latin American stock indexes and currencies:

Latest Daily %

change

MSCI Emerging Markets 1048.87 -0.87

MSCI LatAm 2346.34 -0.53

Brazil Bovespa 122068.88 -0.52

Mexico IPC 55552.10 0.36

Chile IPSA 6605.40 -0.54

Argentina MerVal 1656595.40 0.827

Colombia COLCAP 1399.93 -0.27

Currencies Latest Daily %

change

Brazil real 5.2533 -0.87

Mexico peso 16.9634 0.31

Chile peso 916.1 0.12

Colombia peso 3865.35 -0.07

Peru sol 3.7155 0.57

Argentina peso 895.5000 -0.06

(interbank)

Argentina peso 1205 2.07

(parallel)