*

Brazil's Petrobras jumps after MS upgrade

*

Mexico's ruling bloc confirmed supermajority in lower

house

*

Victor Rodriguez tapped as next Pemex CEO

*

Latam stocks up 0.3%, FX down 0.3%

(Updated at 2010 GMT)

By Shashwat Chauhan and Lisa Pauline Mattackal

Aug 26 (Reuters) - Most Latin American currencies

slipped on Monday as the dollar regained some footing after

hitting multi-month lows last week, with Mexico's peso leading

declines after ruling party Morena secured a supermajority in

parliament.

The U.S. dollar recovered ground after slipping in the

previous session after Federal Reserve Chair Jerome Powell on

Friday said "the time has come" to lower interest rates.

The dollar index gained 0.2%, pressuring Latin American

currencies. MSCI's index tracking regional currencies against

the dollar lost 0.3%.

Mexico's peso slipped 1.8% to 19.428 per dollar

after a rise of more than 2% on Friday, as investors remained

wary of local political developments.

Mexico's electoral authority on Friday confirmed that ruling

party Morena and its allies will hold a two-thirds supermajority

in the lower house but fall just short of that level in the

Senate when the new legislative term begins in September.

The Morena party intends to approve the first part of a

series of constitutional changes proposed by outgoing President

Andres Manuel Lopez Obrador including a reform of the judiciary

that has rattled markets.

The dollar also caught a bid as investors sought safer

assets as worries rose around escalating conflict in the Middle

East, after militant group Hezbollah and Israel exchanged

missiles.

"There appears to be a mild risk-off undertone to trading

today as investors react to the heightened tensions around

Israel (and) Lebanon over the weekend," said Shaun Osborne,

chief FX strategist at Scotiabank.

However, he noted that "USD gains are mild and do not alter

the trajectory of the dollar index, even from a short-term point

of view."

Indeed, the LatAm currency index is on track for its best

month since December, despite a steep sell-off in risk assets at

the start of the month.

Copper producer Chile's peso ticked 0.3% higher as

prices of the red metal rose, supported by a rebound in demand

in China and on hopes of a U.S. rate cut in September.

Brazil's real and Colombia's peso were little

changed.

Brazil posted a larger-than-expected current account deficit

in July, driven by an increase in the services account

shortfall.

Among equities, Brazil's Bovespa added 0.9%, boosted

by a jump of over 7% jump in Petrobras after

brokerage Morgan Stanley upgraded its rating.

The state-owned oil firm was on track for its best day in

nearly two years.

MSCI's index for regional stocks rose 0.3%,

and is also on track for monthly gains.

Elsewhere, Mexico's incoming president tapped academic

Victor Rodriguez to be the next top executive of oil giant

Pemex.

HIGHLIGHTS

** S&P downgrades Kenya's rating to 'B-' on weaker fiscal

and debt trajectory

** Brazil's central bank needs to be more cautious due to

strong economy, director says

** Nigerian economy grows over 3% in Q2 as oil output rises

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1104.28 0.33

MSCI LatAm 2299.15 0.27

Brazil Bovespa 136888.71 0.94

Mexico IPC 53189.08 -0.56

Chile IPSA 6442.64 -0.32

Argentina Merval 1593002.5 -0.869

3

Colombia COLCAP 1343.93 0.97

Currencies Latest Daily %

change

Brazil real 5.5005 -0.26

Mexico peso 19.428 -1.75

Chile peso 905.36 0.29

Colombia peso 4022.84 -0.03

Peru sol 3.7292 -0.12

Argentina peso (interbank) 949 -0.263435

195

Argentina peso (parallel) 1330 1.5037593

98