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Moody's downgrades Mexico outlook to negative

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Peru's economy grows for sixth straight month in September

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El Salvador launches $1 bln bonds with 12% yield

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MSCI Latam stocks off 0.5%, FX index flat

(Updated at 2022 GMT)

By Johann M Cherian

Nov 15 (Reuters) - Most Latin American currencies and

stocks were subdued on Friday, with investors assessing Mexico's

budget proposal for the upcoming year, while Argentine

hard-currency bonds got a lift following a credit ratings

upgrade by Fitch.

Mexico's peso see-sawed between marginal gains

and losses near 20.36 to the dollar, and the yield on 10-year

sovereign bonds ticked up 4 basis points as markets

parsed the country's proposal to narrow its fiscal deficit to

3.9% of gross domestic product in 2025.

The finance minister also expects Latin America's

second-largest economy to

grow between

2% and 3% next year, higher than the International Monetary

Fund's forecast of 1.3%.

Late on Thursday, ratings agency Moody's downgraded the

country's outlook to negative, citing a widening fiscal deficit

and recent controversial judicial reforms.

The peso has depreciated over 16% this year as markets

priced in institutional risks in the government and that U.S.

President-elect Donald Trump's policies against Mexico could

weigh on the economy.

"It's likely that countries across the region will come

under increased pressure from the U.S. to clamp down on Chinese

investment and influence in their countries. This is especially

the case for Mexico given accusations that China is using it as

a base to circumvent U.S. tariffs," said Kimberley Sperrfechter,

an emerging markets economist at Capital Economics.

More broadly, MSCI's index tracking currencies in Latin

America was little changed and was on track for

modest declines for the week. The U.S. dollar was hovering near

a one-year high and was on track for its biggest weekly jump in

over a month.

Peru's sol dipped 0.2%. The copper exporter's economy

expanded on an annual basis for the sixth straight month in

September, garnering praise from IMF officials on the sidelines

of the Asia-Pacific Economic Cooperation summit.

Copper exporter Chile's peso dipped 0.4%, while

Colombia's peso strengthened 1%.

Argentine bonds advanced after

Fitch Ratings upgraded the country's long-term issuer default

rating to "CCC" from "CC," indicating increased confidence in

the country's ability to make upcoming foreign-currency bond

payments.

Economic fundamentals in the inflation-ridden country

have broadly shown signs of improvement under President Javier

Milei's austerity measures.

On the equities side, MSCI's index tracking Latam stocks

slipped 0.5%, with Mexican equities climbing

0.2%.

As part of the budget proposal, Mexico expects to transfer

$6.69 billion to state oil producer Pemex next year to help the

heavily indebted firm meet its debt and loan repayments.

El Salvador issued $1 billion worth of six-year bonds at a

yield of 12%. The country's hard-currency bond

maturing in 2030 trended higher.

Markets in Brazil were shut for a public holiday ahead of a

Group of 20 top economies summit next week.

Key Latin American stock indexes and currencies:

Latin American market

prices from Reuters

MSCI Emerging Markets 1085 0.05

MSCI LatAm 2076.99 -0.52

Brazil Bovespa 127791.6 0.05

Mexico IPC 50421.36 -0.26

Chile IPSA 6527.02 0.74

Argentina Merval 2068870.3 -0.899

Colombia COLCAP 1344.95 -0.2

Brazil real 5.7947 -0.1

Mexico peso 20.3689 0.16

Chile peso 979.41 -0.37

Colombia peso 4431.88 1.02

Peru sol 3.8 -0.18

Argentina peso (interbank) 998 0.05

Argentina peso (parallel) 1120 1.75