EMERGING MARKETS-Latam stocks hit 3-wk low, higher rates loom

* Brazil stocks hurt by tighter monetary policy

* China rate hike knock-on fears continue to weigh

* Brazil Bovespa down 0.6 pct, Mexico's IPC 0.7 pct
(Updates to close)

By Sean Mattson and Luciana Lopez

MEXICO CITY/SAO PAULO, Jan 21 (Reuters) - Latin American
equities closed at a three-week low on Friday as investors
fretted about Brazilian monetary tightening and that higher
Chinese interest rates would slow the region's exports to
China.

The MSCI Latin American stocks index .MILA00000PUS
dipped 0.13 percent and lost 2 percent for the week.

Stronger-than-expected Chinese growth data on Thursday for
2010 led analysts to foresee tighter monetary policy that could
drag on growth and reduce demands for Latin American
commodities.

Brazil's central bank raised borrowing costs late on
Wednesday, issuing a statement that suggested more monetary
measures could be on the way.

"That's bad for the Bovespa. These 'macroprudential
measures' make credit more expensive," said Carlos Camacho, a
fund manager with GAP Asset Management in Rio de Janeiro, using
a phrase coined in the Brazilian central bank's statement
following its rate hike on Wednesday. For details, see
[ID:nN19246398]

Analysts said the losses, which are also fueled by
simmering fears over the euro zone sovereign debt crisis, were
not part of an alarming trend.

"There is nothing behind these corrections, nothing points
to more than profit-taking by investors -- at least up to now,"
said Sergio Garcia Marquez, head of analysis at Value Grupo
Financiero in Mexico City.

Mexico's benchmark IPC stock .MXX index fell 0.70
percent, reaching its lowest level since early December.
Brazilian equities also dragged, with the benchmark Bovespa
index .BVSP down 0.62 percent, its lowest since the end of
January.

Banks were among stocks that fell in Sao Paulo on Friday.

Banco do Brasil (BBAS3.SA), Latin America's largest bank by
assets, gave up 0.45 percent. Itau Unibanco (ITUB4.SA),
Brazil's biggest private sector lender and rival Bradesco
(BBDC4.SA) declined 0.82 percent.

OGX Petro Gas (OGXP3.SA) shed 4.48 percent.

Beef processor JBS (JBSS3.SA) rose 1.62 percent. A group of
companies led by the Brazilian company has arranged a financing
package to bid for all or parts of Sara Lee Corp SLE.N, a
source with direct knowledge of the situation told Reuters. For
more, see: [ID:nN20155307]

But the takeover plan could take a toll on JBS shares, HSBC
analysts said. [ID:nN21228216]

In Mexican trading, shares of top retailer Wal-Mart de
Mexico (WALMEXV.MX) lost 0.95 percent and telecom giant America
Movil (AMXL.MX) dropped 0.42 percent.

Chile's IPSA index .IPSA rose 0.1 percent. The index has
decoupled from regional bourses after the central bank
announced a $12 billion currency intervention.

Industrial conglomerate Copec COP.SN gained 1.58 percent
and retailer Cencosud CEN.SN added 0.31 percent.
(Additional reporting by Michael O'Boyle in Mexico City;
Editing by Dan Grebler)