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Brazil raises primary deficit forecast

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Mexico's peso leads declines in Latin America

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Latin American stocks down 1.6%

(Updated at 3:30 p.m. EDT/1930 GMT)

By Johann M Cherian and Shashwat Chauhan

July 23 (Reuters) - Most currencies in resource-rich

Latin America slipped on Tuesday, tracking weakness in

commodities prices, while investor jitters about the outcome of

U.S. elections later this year and the absence of major economic

data kept risk appetite in check.

The Mexican peso led losses with a 1.3% decline,

ahead of an inflation report in the oil exporting nation later

in the week, as crude prices slipped for a third consecutive

session on growing expectations of a ceasefire in Gaza, which

could abate worries about supply disruptions from the region.

Investors also were paying attention to uncertainty around

the U.S. election campaign and the possible repercussions the

results could have on security, trade and immigration between

the U.S. and Mexico. In the wake of President Joe Biden's

decision to end his reelection campaign, Vice President Kamala

Harris has emerged as the Democrats' candidate to face off

against former President Donald Trump in the Nov. 5 vote.

"Harris stepping up as Democrats' presidential nominee has

lowered the odds of a ... (Republican) sweep. Yet, many are

wondering if the Trump trade has started to hit markets and what

are the signs," strategists at TD Securities wrote in a note.

Colombia's peso also weakened 0.5%, while Chile's

peso slipped 0.7%, as copper prices extended losses to

hit their lowest levels in three and a half months on growing

concern over demand in top consumer China.

Brazil's real pared initial gains and was last down

0.2% to 5.59 per dollar.

Brazil's government on Monday widened its primary deficit

forecast for this year to 32.6 billion reais ($5.9 billion),

prompting a spending freeze to meet the fiscal target.

The real is the top underperformer among major currencies in

the region after fears of excessive spending and interference

with central bank independence sparked a selloff towards the end

of the second quarter.

MSCI's gauge for regional bourses slipped

1.6%, with Brazil's Bovespa falling 1%, weighed down by

a drop in shares of consumer discretionary and materials

companies.

Vale fell 1.5%. The mining giant's copper and

nickel spin-off Vale Base Metals said it has picked Shaun Usmar

as its new CEO.

Telefonica Brasil lost 1.6% after the firm said

its TCloud unit signed a deal to buy cloud service firms IPNET

and IPNET USA for up to 230 million reais ($41.29 million).

Mexico's main index dropped 0.4%, with Grupo Mexico

falling 1.3%. The mining and transport

conglomerate reported a 34% increase in second-quarter net

profit.

Markets in Peru were shut for a public holiday.

Nigeria's central bank raised its benchmark interest rate to

26.75%, while Turkey's central bank held its policy interest

rate steady at 50%.

Hungary's central bank

, on the other hand, delivered its fifteenth successive rate

cut, bringing the base rate down to 6.75%.

Key Latin American stock indexes and currencies:

Latest Daily % change

MSCI Emerging Markets 1087.16 0.15

MSCI LatAm 2228.35 -1.56

Brazil Bovespa 126574.68 -1

Mexico IPC 53783.00 -0.41

Chile IPSA 6565.83 -0.53

Argentina MerVal 1634909.13 2.798

Colombia COLCAP 1362.24 -0.32

Currencies Latest Daily % change

Brazil real 5.5911 -0.41

Mexico peso 18.1565 -1.28

Chile peso 946.6 -0.62

Colombia peso 4009.9 -0.51

Peru sol 3.7547 0.00

Argentina peso 925.5000 0.05

(interbank)

Argentina peso 1425 1.05

(parallel)