(Updates prices, recasts with peso gains)
By Bruno Federowski
SAO PAULO, Aug 16 (Reuters) - The Mexican peso continued to strengthen on Tuesday, reaching its highest in more than three months, despite comments from an influential Federal Reserve policymaker who said U.S. interest rates could rise as soon as next month.
The peso had hit an over three-month high of 17.9010 per U.S. dollar during the session, but pared gains after William Dudley, president of the Federal Reserve Bank of New York, said, "it's possible" to raise rates at the U.S. central bank's next policy meeting on Sept. 20-21, given signs of labor market tightening.
The peso, which has gained over 3.5 percent this month, strengthened on weak U.S. inflation figures and higher commodity prices, and ended the day 0.13 percent stronger at 18.056 per greenback.
The Brazilian real, however, weakened 0.17 percent to close at 3.1940 per dollar as traders reacted to Dudley's comments by expanding bets on policy tightening this year, with a slightly better-than-even chance of a December move.
Stock markets were mixed, with Brazil's benchmark Bovespa stock index dropping 0.49 percent on profit-taking after surging past 59,000 for the first time since 2014 on Monday.
The bourse was weighed down by a 5.56 percent fall in shares of steelmaker Cia Siderurgica Nacional SA, which Reuters reported will announce the sale of a tinplate can producing unit.
Mexico's IPC index ended its nine-day winning streak, losing 0.7 percent, as bank Banorte and retailer Walmex drove losses. (Reporting by Bruno Federowski; Editing by Steve Orlofsky and James Dalgleish)