*

Mexico GDP weakens, peso falls to near seven-week low

*

Commodity currencies slip as China demand worries weigh

*

Venezuela in focus as anti-Maduro protests spread

*

Chile rate decision awaited later in the day

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

By Lisa Pauline Mattackal and Shashwat Chauhan

July 30 (Reuters) - Mexico's peso led broader declines

in Latin American currencies after weaker-than-expected economic

data, while worries about commodity demand in China and caution

ahead of a bevy of key central bank decisions weighed on

sentiment.

Mexico's economy grew 0.2% in the second quarter, versus

analysts expectations of a 0.4% rise.

Slowing growth in Latin America's largest economy fueled

expectations for the central bank to cut interest rates at its

August meeting, weighing on Mexico's peso which fell 0.6%

to 18.746 per dollar, hitting its lowest in nearly seven weeks.

"The performance of the economy in H1 would be supportive of

an eventual resumption of policy normalization once risk

management considerations can be sent again to the back burner

and the canonical inflation activity balance can be given

preeminence again in policy deliberations," Deutsche Bank

analysts wrote in a note.

Worries about commodity demand from China, the world's

second-largest economy, also weighed on producers in Latin

America, after there were no specific new stimulus efforts

announced at the country's Politburo meeting.

Oil slumped to its lowest since June, while major metals

including iron ore and copper also lost ground.

Trading was also cautious ahead of the U.S. Federal

Reserve's policy decision on Wednesday, with investors watching

for a dovish tone from policymakers to gauge whether market bets

on a September rate cut are on the right track.

Chile's peso shrugged off initial losses and was up

0.1% ahead of the Banco Central de Chile's policy decision later

in the day, where the bank is expected to ease its main lending

rate by 25-basis-points.

Rate decisions from both Colombia and Brazil are also on

deck on Wednesday. Colombia is expected to ease policy from

11.25% to 10.75%, while Brazilian policymakers are expected to

hold borrowing costs again at 10.5%.

Rate trajectories in the region highlight the challenges

facing central banks in the region as they balance the need to

boost economic growth with an uncertain global macroeconomic

scenario and higher-for-longer rates in major developed

economies such as the U.S.

The Colombian peso lost 0.5%, while Brazil's real

was down 0.1%.

MSCI's indexes tracking the region's stocks

was down 0.3%, with Brazil's Bovespa down 0.6%, while

Argentina's Merval slipped 4.4% to an over two-month

low.

Commodity price declines dragged Brazil's Vale

and Petrobras which lost 1.8% and 1%, respectively.

Venezuelan politics remained in focus, with protests

spreading throughout the country after Nicolas Maduro was

announced the winner of its presidential election despite the

opposition claiming victory.

Venezuela's dollar-denominated bonds

were broadly steady after sharp declines on

Monday.

HIGHLIGHTS

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loses appeal

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options trading frenzy

Key Latin American stock indexes and currencies:

Latest Daily % change

MSCI Emerging Markets 1072.20 -0.47

MSCI LatAm 2172.67 -0.31

Brazil Bovespa 126251.39 -0.55

Mexico IPC 52360.84 -0.3

Chile IPSA 6472.98 -0.2

Argentina MerVal 1417202.78 -4.323

Colombia COLCAP 1333.49 -0.54

Currencies Latest Daily % change

Brazil real 5.6232 0.03

Mexico peso 18.7470 -0.64

Chile peso 954.2 -0.12

Colombia peso 4080.32 -0.51

Peru sol 3.7229 -0.04

Argentina peso 932.0000 0.00

(interbank)

Argentina peso 1365 3.66

(parallel)