*

Brazil's fiscal package to come out this week, finance

minister

says

*

Mexican President Sheinbaum urges dialogue with Trump

*

Latam FX down 0.34%; stocks down 0.41%

(Updates with mid-session trading)

By Shashwat Chauhan and Pranav Kashyap

Nov 26 (Reuters) -

Mexico's peso took center stage in Latin America on Tuesday,

suffering significant losses as it buckled under intense

pressure following U.S. President-elect Donald Trump's vow to

impose tariffs

on all imports from Mexico, the region's second-largest

economy.

Trump, who takes office on Jan. 20, said he would impose a

25% tariff on imports from Canada and Mexico until they clamped

down on drugs and migrants crossing the border in a move that

would appear to violate a free-trade deal.

The peso fell as much as 2.7%, hitting its lowest

point against the greenback since July 2022. It crawled back

some losses and traded 2% lower at 20.69.

Mexican President Claudia Sheinbaum warned of dire economic

consequences for both countries from tariffs and urged dialogue

following Trump's threat, while hinting retaliation measures.

"It was a knee-jerk reaction, but a warranted one, given

the interlinks between the Mexican and U.S. economy," Rachel

Ziemba, founder of advisory firm Ziemba Insights said.

"Investors also are trying to process the Mexican

president's response saying that they might impose counter

measures - it just highlights the uncertainty and additional

costs in the bilateral trade relationship."

Minutes from the Mexican central bank's last policy meeting,

where it had cut interest rates by 25-basis-points, are

scheduled to be released on Thursday.

Trump separately outlined "an additional 10% tariff, above

any additional tariffs" on imports from China, sending the

Chinese yuan down 0.2% in offshore trading.

Brazil's real, slipped 0.18% at 5.80 per dollar in

choppy trading.

Late on Monday, Brazilian Finance Minister Fernando Haddad

said a fiscal package with spending cut measures was finalized

in a meeting with President Luiz Inacio Lula da Silva, adding

the government will be ready to announce the details this week.

Data from statistics agency IBGE showed Brazil's consumer

prices rose more than expected in the month to mid-November,

further fueling bets that the central bank will keep hiking

interest rates.

Latin American assets have run into turbulence in November,

with currencies of Mexico and Brazil amongst the worst

performers in emerging markets, as investors mull the

implications of Trump's policies on trade, tariffs and

immigration.

Continued repricing of the Federal Reserve's interest rate

path has also helped the dollar globally, weakening EM

currencies.

Minutes from the Fed's meeting earlier this month showed

officials appeared divided at how much more they may need to cut

interest rates.

MSCI's index for Latin American currencies

shed 0.3%, while a gauge for stocks fell 0.4%.

Latin American stock estimates for 2025 have been cut due to

increasing uncertainty about Mexico's outlook and Brazil's

public finances, amid concerns of a possible correction in the

near-term, a Reuters poll found.

Elsewhere in emerging markets, Nigeria's central bank raised

its benchmark lending rate by 25 basis points to 27.50%, citing

renewed inflationary pressures in Africa's most populous nation.

Key Latin American stock indexes and currencies:

Stock indexes

Latest Daily % change

MSCI Emerging Markets 1087.15 -0.46

MSCI LatAm 2075.89 -0.41

Brazil Bovespa 130004.8 0.75

Mexico IPC 49810.2 -0.79

Chile IPSA 6558.17 0.14

Argentina MerVal 2261178.1 1.92

Colombia COLCAP 1395.42 -0.22

Currencies Latest Daily % change

Brazil real 5.8085 -0.18

Mexico peso 20.6904 -2.02

Chile peso 976.7 -0.12

Colombia peso 4400.05 -0.52

Peru sol 3.763 0.27

Argentina peso (interbank) 1,007.0 0.00

Argentina peso (parallel) 1,115.0 1.33