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Chile rate decision on tap

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Mexico's half-month May inflation sees third consecutive

rise

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SQM swings to $870 mln loss on sinking prices, tax ruling

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Latam stocks down 0.8%, FX off 0.2%

(Updated at 1950 GMT)

By Johann M Cherian and Shashwat Chauhan

May 23 (Reuters) - Currencies in resources-rich Latin

America came under pressure on Thursday as commodity prices lost

ground, while Mexican bond yields ticked up after local economic

data and investors awaited a policy decision out of Chile.

Oil exporter Colombia's peso weakened 1%, and was on

track for its biggest daily drop in three weeks, as crude prices

dropped over 1% on concerns of the Federal Reserve staying put

on U.S. interest rates for longer than previously expected.

MSCI's index tracking Latam currencies shed

0.2%, with the peso of fellow oil exporter Mexico

slipping 0.5% against the dollar

Chile's peso dipped 0.1% following a more than 2%

fall in the last session as copper prices continued to retreat.

Brazil's real and Peru's real slipped 0.1% and

0.5%, respectively.

On the equities front, Mexican shares shed 0.9%,

pressured by a tick up in bond yields

by around 3-4 basis points, after half-month

inflation ticked up in the first two weeks of May, while

separate data signaled that the region's second largest economy

grew better-than-expected in the first quarter.

"The rise in Mexico's headline inflation in the first half

of May was driven by another jump in agricultural price

inflation," said Jason Tuvey, deputy chief emerging markets

economist at Capital Economics.

"But core services inflation remained uncomfortably strong,

which means that the chances of Banxico restarting its easing

cycle at its next Board meeting in June are slipping."

Further, minutes from Banxico's last policy meeting

indicated that some governing board members cautioned against

resuming interest rate cuts as inflation persists.

MSCI's index for Latin American stocks

dropped 0.9%, extending the previous session's near 2% slide,

with Brazil's Bovespa shedding 0.8% as financials stocks

weighed.

Equity indexes of the regions biggest economies, Brazil and

Mexico, have lagged peers as local central banks have caution

against loosening credit conditions aggressively before the Fed

starts its own easing cycle, while signs of price pressures

flaring up are also a worry.

Colombia's Colcap added 0.2%. Rating agency

Moody's downgraded Colombian majority state-owned energy company

Ecopetrol into junk territory, citing increased

indebtedness, dividends flowing and an ambitious investment plan

over the next three years. The stock was, however up 0.6%.

Chile's main index climbed 0.8%, ahead of a local

central bank decision, where a Reuters poll of economists

indicate the regulator will reduce interest rates by at least

50-basis points as it concludes its two-day policy meeting.

Among single stocks, SQM swung into an $870

million net loss in the first quarter. However, shares of the

miner were up 0.7%.

Latin American market prices from Reuters:

Latin American market

prices from Reuters

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1090.56 -0.43

MSCI LatAm 2418.35 -0.87

Brazil Bovespa 124581.26 -0.85

Mexico IPC 55905.21 -0.93

Chile IPSA 6790.62 0.79

Argentina MerVal 1518446.60 -2.841

Colombia COLCAP 1413.17 0.28

Currencies Latest Daily %

change

Brazil real 5.1547 -0.01

Mexico peso 16.7254 -0.39

Chile peso 908.9 -0.17

Colombia peso 3870.03 -1.07

Peru sol 3.7242 0.02

Argentina peso 890.0000 0.06

(interbank)

Argentina peso 1260 1.19

(parallel)