*

Brazil's service sector hits fresh record high in

September

*

World leaders head to South America for summit

*

Mexico to simplify fiscal regime for state oil firm Pemex

*

MSCI Latam stocks index off 0.2%, FX dips 0.1%

(Updated at 14:40 ET)

By Pranav Kashyap and Johann M Cherian

Nov 13 (Reuters) -

Most Latin American currencies edged lower against a

volatile dollar on Wednesday, yet the Mexican peso defied the

trend as investors braced for the forthcoming budget

announcement and a potential rate cut on Thursday.

MSCI's index tracking Latin American currencies

dipped 0.1%, as the dollar see-sawed between

marginal gains and losses after an in-line U.S. inflation report

underscored the likelihood of an interest rate cut by the

Federal Reserve in December.

The greenback was close to a six-month high as markets

priced in higher interest rates under an upcoming Donald Trump

administration, whose fiscal, trade and immigration polices are

seen as inflationary by analysts.

The Mexican Peso firmed 0.46% against to the dollar.

The currency was poised to snap a three-day losing streak.

On Thursday, the Mexican government is set to unveil its

budget for 2025, amid growing investor anxiety over the nation's

fiscal deficit, which is anticipated to soar to 5.9% this year

-the highest it has been in several decades.

President Claudia Sheinbaum announced a plan to simplify

the fiscal regime for state oil firm Petroleos Mexicanos, in

effort to boost the producer whose heavy debts have weighed on

state coffers.

Investors are also anticipating a 25 basis-point interest

rate cut, along with the unveiling of the 2025 budget, both

slated for Thursday.

"These are the two factors (budget and rate decision)

that will move the peso over the next few months. Investor will

get a close look on how Mexico will behave this time are they

going to adapt a more cautious approach or if they are going to

continue cutting rates," said Andres Abadia, Pantheon

Macroeconomics' chief Latin America economist.

Meanwhile, Copper exporter Peru's sol dipped 0.63%,

tracking weak prices of the red metal. The country is also

hosting the Asia-Pacific Economic Cooperation (APEC) forum that

starts today through November 15.

Although the formal agenda centers on financing energy

transition, discussions are likely to pivot towards the

implications of a potential Trump 2.0 presidency.

Meanwhile, the Brazilian real gave up initial gains

and weakened 0.87% after Brazil's finance minister Fernando

Haddad signals uncertainty over a fiscal package announcement

this week.

The real currency has weakened to multi-year lows

against the U.S. dollar in recent weeks amid government

hesitation to announce a fiscal package to stem a rapid rise in

mandatory spending.

The local central bank sold $4 billion in two dollar

auctions with repurchase agreements after earlier cancelling a

similar scheduled operation due to technical issues.

Separately, data revealed stronger-than-expected growth in

services activity in September, further bolstering the case for

upcoming interest rate hikes by the domestic central bank.

Fellow copper producer Chile's peso was trading flat

after three sessions of declines, while oil exporter Colombia's

peso depreciated 0.78%, hitting its lowest level in over

a year, as crude prices dipped.

On the stocks front, an index tracking

bourses in the region dropped 0.3%, with heavy-weight Brazilian

equities trading flat.

Mexican stocks lost 0.46% and was set to mark its

fourth day in the red, while Colombia's Colcap index

lost 1.27%

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

Equities Latest Daily %

change

MSCI Emerging Markets 1093.72 -0.86

MSCI LatAm 2096.08 -0.27

Brazil Bovespa

flat

127608.39

Mexico IPC 50858.30 -0.5

Chile IPSA 0.7

6558.50

Argentina Merval 2045221.1 1.59

9

Colombia COLCAP 1328.56

-1.27

Currencies Latest Daily %

change

Brazil real 5.80 -0.87

Mexico peso 20.49 0.46

Chile peso 984.8 0.05

Colombia peso 4479.25 -0.78

Peru sol 3.81 -0.63

Argentina peso (interbank) 998 flat

Argentina peso (parallel) 1120

flat