EMERGING MARKETS-Latam currencies fall as world economy weakens

* Factory activity down in China, Europe, U.S.

* Brazil's mild inflation supports bets on lower rates

* Brazil real, Mexican peso drop around 0.5 pct

By Natalia Cacioli

SAO PAULO, June 21 (Reuters) - Latin American currencies
slid on Thursday after weak economic data in the United States,
China and Europe added to concerns about the world economy and
weighed on prospects for the region's exports.

The Brazilian real and the Mexican peso
were around 0.5 percent weaker while the Chilean peso,
more dependent on commodity prices, dropped 0.9 percent.

Business surveys showing China's industrial sector shrinking
for an eighth consecutive month in June and the euro zone's
private sector contracting at its fastest pace in three years
weighed on commodity prices and Latin American assets from the
beginning of the session.

But the mood really soured when a survey by the Philadelphia
Federal Reserve Bank showed factory activity in the U.S.
mid-Atlantic region contracted for a second month in a row, to a
level far below market expectations.

"Markets seem to have set foot on a negative trend after the
U.S. data release. Investors are uncomfortable about taking risk
at the moment, and they are running to the dollar," said
Reginaldo Galhardo, manager at the foreign exchange desk of
Treviso brokerage in Sao Paulo.

Investors also kept a wary eye on Europe as Spain's
medium-term borrowing costs hit a fresh record at auction,
underscoring the depth of the region's debt crisis.
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"We've seen a very firm recovery in markets in recent days
based on an improvement in mood after the Spanish bank bailout
came through, but the outlook is still complicated and nothing
very concrete has happened to solve the crisis in Europe," said
Adriano Moreno, a strategist with advisory firm Futura
Investimentos in Salvador, Brazil.

BRAZIL INTEREST RATES DOWN

In contrast to weak economic data elsewhere, Brazil's
national statistics bureau said the country's jobless rate fell
unexpectedly in May, in a sign that the domestic labor market
remained strong despite weak economic growth.

The data did little to help Brazilian assets, however, and
local interest-rate futures dropped as a mild inflation reading
reinforced the view that the central bank will keep cutting
interest rates to support the economy.

Interest-rate contracts maturing January 2014, the
most liquid at Brazil's BM&F Bovespa, fell to 8.06 percent from
Wednesday's close of 8.08 percent.

Latin American FX prices from Reuters at 1522 GMT:

Brazil real 2.0440 -0.58 -8.59

Mexico peso 13.7613 -0.46 1.51

Argentina peso* 5.8900 0.85 -19.69

Chile peso 499.8000 -0.90 3.90

Colombia peso 1,777.5000 -0.39 9.05

Peru sol 2.6530 -0.26 1.66

* Argentine peso's rate between
brokerages

(Additional reporting by Walter Brandimarte and Asher Levine;
Editing by Andrea Ricci)