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)
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