*

Capital flows to EM to net $903 bln in 2024, IIF says

*

Rand weakens by more than 1% as vote count underway

By Sruthi Shankar and Bansari Mayur Kamdar

May 30 (Reuters) - The Mexican peso steadied on Thursday

after two days of declines as the dollar retreated after

softer-than-expected U.S. economic data and investors focused on

the upcoming presidential election in Latin America's

second-largest economy.

The peso edged up to 16.95 per dollar, reversing from

a one-month low of 17.13 hit earlier in the session.

The dollar and Treasury yields ticked lower after data

showed U.S. gross domestic product grew at slower pace than

previously expected in the first quarter, keeping the Federal

Reserve on track to possibly begin cutting interest rates before

the end of the year.

Other Latin American currencies including the Colombian peso

and Chilean peso, however, extended losses.

Most polls showed ruling party hopeful Claudia Sheinbaum on

course to become the country's first woman president in Sunday's

national vote in Mexico.

"In terms of Mexico this weekend, we think it's merely a

formality for Sheinbaum and a continuation of AMLO's legacy. The

bigger question is on the size of the majority and whether she

can do what AMLO didn't in terms of wide sweeping reforms,"

Simon Harvey, head of FX analysis at Monex Europe told the

Global Markets Forum.

"I'd pay closer attention to the bond markets on the size of

their respective mandates, especially in Mexico where fiscal

consolidation is required."

The Mexican peso touched a near nine-year-high versus the

dollar last month, but has lost some steam since on concerns

about the outcome of the election and uncertainty around U.S.

rate path.

Major developing economies are expected to see net capital

inflows rise by nearly a third to $903 billion this year, though

much of that hinges on global growth holding up, according to a

report by the Institute of International Finance (IIF).

The 32% net increase is expected to be mostly driven by a

strong recovery in foreign direct investment and cash directed

at equity portfolios, the report said.

Elsewhere, the South African rand weakened by more

than 1% after projections showed the governing African National

Congress (ANC) was set to lose its parliamentary majority in

this week's election, fueling uncertainty about policies under a

coalition government.

South Africa's central bank kept its main interest rate

unchanged at 8.25% as expected.

Brazilian markets were closed on account of Corpus Christi

Day.

HIGHLIGHTS:

** Suffering drought, heat, blackouts, Mexicans head to the

polls

** Argentina market analysts see chance of another rate cut

** Chile unemployment rate hits 8.5% in quarter through

April

Key Latin American stock indexes and currencies:

Latest Daily %

change

MSCI Emerging Markets 1058.55 -1.26

MSCI LatAm 2354.13 -0.41

Brazil Bovespa

Mexico IPC 54917.38 -0.53

Chile IPSA 6682.49 0.01

Argentina MerVal 1601357.89 2.145

Colombia COLCAP 1397.38 0.21

Currencies Latest Daily %

change

Brazil real

Mexico peso 16.9451 0.02

Chile peso 918.4 -0.76

Colombia peso 3875.66 -0.22

Peru sol 3.7547 -0.19

Argentina peso (interbank) 894.0000 0.00

(Reporting by Sruthi Shankar and Bansari Mayur Kamdar in

Bengaluru; Editing by Sriraj Kalluvila)