(Updated at 1455 GMT)

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Brazil's economic activity up in May despite flood tragedy

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Mexico's Mejia says rate cuts should be gradual

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Peru cenbank sees economy growing 4% in second quarter

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Argentina to sell dollars on parallel market

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Stocks off 0.2%, FX down 0.1%

By Johann M Cherian

July 15 (Reuters) - Mexico's peso led declines across

Latin American currencies on Monday, as investor expectations on

the likelihood of a second term for former U.S. President Donald

Trump and declines in commodity prices aided the risk-off mood.

The currency of the second-largest economy in the region,

Mexico depreciated 1.2%, as Donald Trump cemented his

hold on his Republican Party at its 2024 convention this week,

having survived an assassination attempt.

The former U.S. President's policies on trade protectionism

and against illegal migration are seen as negative for emerging

markets.

"The most exposed country in terms of risks relative to the

current condition is Mexico, given issues on trade where Mexico

has overtaken China in terms of bilateral trade balance and the

issue of immigration on southern border as well as security,"

said Olga Yangol, head of EM research & strategy at Credit

Agricole.

Elsewhere, Banxico Deputy Governor Omar Mejia's comments on

gradual adjustments to the local benchmark interest rate did

little to support the currency, as per a report.

More broadly, MSCI's index tracking Latin American

currencies eased 0.1%, from a nearly 3% gain

over the previous two weeks. Still, the currencies are down

year-to-date as uncertainties concerning monetary policy, fiscal

stability and political developments loom.

Brazil's real slipped 0.4%. Economic activity in the

region's largest economy increased by a seasonally adjusted

0.25% in May from the previous month, showing resilience despite

severe flooding in the country's southernmost state during the

period.

The world's largest copper exporter, Chile's peso

weakened 0.6%, as prices of the red metal lost its shine after

economic growth data from top consumer China weighed on demand

outlook.

Oil exporter Colombia's peso weakened 0.9%, as crude

prices slipped.

Peru's sol inched up 0.2% in thin trades, after

touching nearly two-month highs in the previous session. The

local central bank said it expects second-quarter annualized

Gross Domestic Product (GDP) growth to land around 4% and around

5% for the month of May, returning to growth after the economy

fell into a technical recession last year.

On the equities front, MSCI's index tracking local bourses

slipped 0.5%, with Mexican stocks down

0.3%.

Brazil's Bovespa was flat, with CCR down

1.2%, after a report said the Sao Paulo state government will

revoke the silver line subway concession belonging to

infrastructure firm.

Argentina's peso strengthened nearly 2% in parallel

trade, while the MerVal index dropped 4.3%. The Javier

Milei-led government said the local central bank will start

selling U.S. dollars in the country's parallel foreign exchange

markets in an effort to combat inflation and freeze the

country's money supply.

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1120.11 -0.31

MSCI LatAm 2320.03 -0.1

Brazil Bovespa 128909.91 0.01

Mexico IPC 54744.31 -0.38

Chile IPSA 6551.18 0.02

Argentina MerVal 1640257.22 -4.392

Colombia COLCAP 1375.02 0.07

Currencies Latest Daily %

change

Brazil real 5.4494 -0.35

Mexico peso 17.8180 -1.19

Chile peso 910.3 -0.54

Colombia peso 3956.1 -0.73

Peru sol 3.7339 -0.56

Argentina peso 921.5000 -0.22

(interbank)

Argentina peso 1420 5.63

(parallel)