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Brazil's inflation up more than expected in October

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Petrobras up after higher earnings, dividend

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Colombian government eyes further 2024 budget cuts

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MSCI Latin American stocks index down 2%, FX down 1.1%

(Updated at 3:30 p.m. ET)

By Johann M Cherian and Ankika Biswas

Nov 8 (Reuters) - Latin American currencies and stocks

dropped on Friday, as uncertainty around a second Trump

administration in the U.S., disappointment over a China stimulus

package and domestic economic woes hurt risk-taking.

MSCI's index tracking Latam stocks slid 2%,

while a currencies index lost 1.1% as the dollar

rebounded from a brief pause spurred by the Federal Reserve's

25-basis-point interest-rate cut in the previous session.

Despite severe market volatility on Wednesday following

Donald Trump's presidential victory, the indexes were set for

weekly gains, with analysts saying that much of the risk was

priced in ahead of the U.S. election.

The MSCI stocks index has lost more than 20% so far this

year, while the currencies index is down more than 7% during the

same period.

Mexico's peso depreciated nearly 2% on Friday,

hovering over 20-against-the-greenback, while equities

fell 0.7% as investors were on edge for further clues on Trump's

policies, much of which could be detrimental to Latin America's

second-largest economy.

However, the currency had fared better than feared, even

shrugging off the steep losses on the U.S. election outcome day

and gaining over 1% on Thursday.

"One explanation being put forward to explain the relatively

modest moves in the Mexican peso since Trump's election victory

is that the country may be spared many of Trump's tariffs

threats (as happened during his first term)," said Kimberley

Sperrfechter, EM economist at Capital Economics.

"But there are big uncertainties around the extent to

which Trump may now be more wedded to imposing tariffs and the

Sheinbaum administration's ability to build good working

relations with the U.S. and its willingness to offer

concessions."

A top Mexican diplomat said the country will continue

pursuing measures to stop migrants from reaching its northern

border with the US, as Trump has vowed a new crackdown on

illegal immigration.

Brazil's real weakened 1.4% as investors assessed

data that showed consumer prices rose more than expected in

October, days after the central bank raised interest rates.

The real has lost nearly 16% so far this year despite recent

rate hikes on worries of fiscal instability. Markets are now

pricing in a 75-basis-point rate hike at the policy meeting next

month.

Brazilian state-run oil firm Petrobras climbed 2%

following strong third-quarter net profit and an announcement of

$3 billion in dividends.

Colombia's peso slipped fell 1.3%, tracking a 2% drop

in crude prices. The Colombian government is looking at making

additional cuts to its 2024 budget amid fiscal difficulties in

the oil-producing nation, two government sources close said.

The currencies of copper producing nations Chile and

Peru weakened 2.3% and 0.4%, respectively, as copper

prices dropped on disappointment over the extent of top consumer

China's fiscal stimulus measures.

Meanwhile, data showed Chile's consumer prices rose more

than expected.

On the equities front, the Bovespa index fell 1.4%

to a three-month low, with mining giant Vale slumping

5% on the back of lower copper and iron ore prices.

Argentina's MerVal index was the worst-hit regional

bourse, down 2.5%, after hitting another record high during the

day.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1134.17 -0.56

MSCI LatAm 2128.45 -1.98

Brazil Bovespa 127902.91 -1.37

Mexico IPC 51941.91 -0.71

Chile IPSA 6519.72 -0.64

Argentina Merval 1964487.25 -2.534

Colombia COLCAP 1340.32 -1.38

Brazil real 5.7236 -0.55

Mexico peso 20.162 -1.85

Chile peso 970.17 -2.25

Colombia peso 4354.61 -1.25

Peru sol 3.764 -0.37

Argentina peso (interbank) 993.5 0.05

Argentina peso (parallel) 1115 0.45