July 3, 2017 / 9:39 PM / a year ago

EMERGING MARKETS-Mexico peso down on strong U.S. factory data

 (Updates with final prices)
    SAO PAULO, July 3 (Reuters) - The Mexican peso slipped on
Thursday after U.S. manufacturing activity increased to its
strongest level in nearly three years, driving expectations of
faster rate hikes in coming months.
    An index of U.S. national factory activity tracked by the
Institute for Supply Management rose to 57.8 last month, the
strongest reading since August 2014, driving U.S. 10-year yields
to their highest levels in seven weeks.
    The figures allayed some concerns over the pace of economic
recovery that had left traders skeptical of the Federal
Reserve's stated plan of raising U.S. rates once more before the
end of 2017 and another three times next year.
    Faster policy tightening could dampen the allure of
high-yielding emerging market assets, weighing on the value of
their currencies.
    Mexico's peso weakened 0.56 percent against the
dollar, tracking currencies from other emerging markets, and
reaching its lowest level in over a week. Trading volumes were
thin ahead of the U.S. July Fourth holiday on Tuesday.
    The benchmark Mexican stock index tracked Wall Street
higher, rising to a lifetime high and closing up 0.5 percent.
    The Brazilian real rose slightly. Traders pointed to
receding fears that a corruption scandal could delay President
Michel Temer's agenda of economic structural reforms.
    Brazil's benchmark Bovespa stock index rose 0.4
percent as rising prices of iron ore lifted shares of miner Vale
    Shares of sewage and water utility Cia de Saneamento de
Minas Gerais SA, which are not part of the benchmark
index, leapt after regulators allowed the company to raise
tariffs by more than expected.
    Latin American stock indexes and currencies at 2110 GMT:
 Stock indexes                                daily %    YTD %
                                     Latest    change   change
 MSCI Emerging Markets               1014.24     0.34    17.62
 MSCI LatAm                          2557.91     0.54     9.28
 Brazil Bovespa                     63279.58      0.6     5.07
 Mexico S&P/BVM IPC                 50109.16      0.5     9.62
 Chile IPSA                          4783.89     0.77    15.24
 Chile IGPA                         23956.82     0.71    15.54
 Argentina MerVal                   22223.11     1.62    31.36
 Colombia IGBC                      10891.25     0.43     7.54
 Venezuela IBC                     123355.27      0.1   289.07
 Currencies                                   daily %    YTD %
                                               change   change
 Brazil real                          3.3051     0.23    -1.69
 Mexico peso                         18.2215    -0.56    13.82
 Chile peso                            662.0     0.26     1.31
 Colombia peso                          3044    -0.08    -1.40
 Peru sol                              3.257    -0.34     5.18
 Argentina peso (interbank)            16.80    -1.31    -5.51
 Argentina peso (parallel)             16.86    -0.41    -0.24

 (Reporting by Bruno Federowski; editing by Grant McCool and Dan
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