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S&P sees cautious Mexico economic policy, US trade

challenges

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Mexico econ min suggests possible retaliation against US

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Colombia economy seen growing 2.3% in Q3 from a year ago

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El Salvador offers to buy back debt, bonds rise

(Updated at 2:30 p.m. ET)

By Johann M Cherian and Pranav Kashyap

Nov 12 (Reuters) -

Most Latin American currencies and stocks took a downturn on

Tuesday, owing to weakness in metal prices and as investors

braced for a potential Republican majority in the U.S., while

closely monitoring domestic events in Brazil and Mexico.

Mexico's peso dipped for a third day in a row, down

1.5%, at a near one-week low against the dollar.

Markets assessed possible appointees to U.S.

president-elect Donald Trump's cabinet and the likelihood that

his Republican party won a majority in the U.S. House of

Representatives, paving the way for the party to control both

chambers of Congress and the presidency.

Known as a "Red Sweep", this could make it easier for him to

follow through on campaign rhetoric that analysts say could be

detrimental for emerging markets broadly.

S&P Global Ratings expects Mexico to continue cautious

macroeconomic management in next two years, while cautioning of

potential challenges including trade with U.S.

The peso is down 4% in three sessions.

Mexico is expected to be one of the most vulnerable, with

sources saying executive actions on immigration could be among

those Trump signs on day one. The peso has underperformed peers

and the equity index is among top regional decliners.

The dollar hit a five-month high on expectations

Trump's policies could stoke inflation pressures and keep

interest rates elevated.

"What's so funny is that Trump doesn't want a stronger

dollar, but he looks like he's going to get one anyway," said

Fiona Cincotta, senior market analyst at City Index.

With

copper prices

slumping to two-month lows, top exporters Chile's

and Peru's currencies dipped 0.6% and 0.5%, respectively.

Meanwhile, Brazil's real slipped 0.2% as markets

awaited any clues on fiscal austerity measures first expected

after October's municipal elections.

The Brazilian central bank said that further deterioration

in inflation expectations could extend its monetary tightening

cycle.

Colombia's peso also weakened 2% against the dollar.

The oil exporting nation's economy is forecast to have grown

2.3% in the third quarter.

Kimberley Sperrfechter, EM economist at Capital

Economics said that Colombian assets are likely to remain under

pressure as investors are largely spooked by the deterioration

in the country's public finances and with the government showing

no clear willingness to rein in spending.

On stock markets, Brazil's Bovespa edged 0.1% lower,

as gains were kept in check, while Mexican stocks dropped

0.6% ahead of an interest rate decision and a budget

announcement later in the week.

Economy Minister Marcelo Ebrard suggested that the

government could retaliate if the incoming Trump administration

slaps tariffs on exports from Mexico. The U.S. is Mexico's

biggest trade partner.

Elsewhere, data showed Argentina's inflation rate stood at

2.7% in October, below expectations.

Further, El Salvador launched a

voluntary external debt repurchase offer

to holders of bonds maturing between 2027 and 2034.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1102.82 -2.05

MSCI LatAm 2102.51 -0.25

Brazil Bovespa 127721.24 -0.12

Mexico IPC 51155.94 -0.57

Chile IPSA 6510.19 -0.45

Argentina Merval 1988460.77 0.031

Colombia COLCAP 1342.87 0.56

Brazil real 5.7655 -0.17

Mexico peso 20.6371 -1.49

Chile peso 985.3 -0.63

Colombia peso 4447.5 -2.04

Peru sol 3.795 -0.45

Argentina peso (interbank) 997.5 0.15

Argentina peso (parallel) 1115 1.79