(Updated at 1455 GMT)

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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%, currencies off 0.4%

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Forint eases as Hungary's central bank cuts rates

By Johann M Cherian

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

Latin America slipped on Tuesday, tracking weakness in

commodities prices, while investors also focused on some fiscal

austerity measures undertaken by Brazil's President Luiz Inacio

Lula da Silva.

The Mexican peso led losses with a 0.7% 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 possible repercussions the

results of the Nov. 5 presidential election could have on

security, trade and immigration between the U.S. and Mexico.

Colombia's peso also weakened 0.2%, while Chile's

peso slipped 0.3%, 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 outperformed its peers and was up 0.1%.

Traders took some comfort from the Brazilian government's

decision to widen its annual primary deficit forecast to 32.6

billion reais ($5.9 billion), prompting a spending freeze to

meet a fiscal target aimed at broadly eliminating the primary

deficit in Latin America's largest economy.

"The government does not have revenue growth under its

direct control, because a lot of that depends on growth of the

economy, but what it has under its control is spending," said

Thierry Wizman, global FX and rates strategist at Macquarie.

"We got to the point where you needed a 'mini crisis' in the

currency to prompt the politicians in Brazil to take some

corrective action. It's relevant that Lula has made these

announcements, but they're in response to a crisis, not

proactive measures."

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%, with Brazil's Bovespa down 0.5%, weighed down by a

drop in commodities-linked stocks.

Vale fell 1.2%. 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 0.4% 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 slipped 0.6%, with Grupo Mexico

falling 3%. The mining and transport conglomerate

reported a 34% increase in second-quarter net profit.

Hungary's forint weakened 0.3% against the euro

after the country's central bank lowered its key interest rate

by 25 basis points to 6.75%, as expected.

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

Stock indexes Latest Daily %

change

MSCI Emerging Markets 1087.40 0.18

MSCI LatAm 2240.97 -1

Brazil Bovespa 127269.54 -0.46

Mexico IPC 53632.78 -0.69

Chile IPSA 6594.61 -0.09

Argentina MerVal 1599168.44 0.551

Colombia COLCAP 1364.17 -0.18

Currencies Latest Daily %

change

Brazil real 5.5781 0.10

Mexico peso 18.0774 -0.84

Chile peso 945.6 -0.52

Colombia peso 4005.18 -0.39

Peru sol 3.7547 0.00

Argentina peso 926.0000 0.00

(interbank)

Argentina peso 1425 1.05

(parallel)