EMERGING MARKETS-Brazil's Bovespa drops after Rousseff poll gains
SAO PAULO, Sept 4 (Reuters) - Brazil's benchmark stock index was on track to post its biggest daily loss in over three weeks on Thursday after electoral polls showed President Dilma Rousseff gaining on challenger Marina Silva ahead of October's election.
The MSCI Latin American stock index dropped off a 15-month peak, while most currencies weakened.
Brazil's Bovespa stock index dropped about 1.3 percent, driven by losses in widely-traded shares such as state-run oil producer Petroleo Brasileiro SA and lender Itau Unibanco Holding SA.
Two polls released Wednesday night show Rousseff narrowed challenger Marina Silva's lead in a potential second round runoff. Many investors are betting that a non-Rousseff government would be friendlier to business and would enact policies that are more favorable to minority investors in state-run companies like Petrobras.
Gains in Mexican stocks were led by telecommunications firm America Movil and conglomerate Alfa.
The index, which is up more than 8 percent this year, has been buoyed by a series of reforms, like an energy sector overhaul, and plans for a new $9 billion airport that have lifted investor optimism in the country's economic prospects.
Brazil's real was little-changed the day after the central bank elected to hold its benchmark Selic interest rate at 11 percent while signaling that it is in no rush to cut rates further in the near term.
Mexico's peso weakened its most in over two weeks, a day before the central bank is set to announce its next rate-setting decision. (Reporting by Asher Levine; Editing by Bernard Orr)
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