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. [ID :nL5E8HL57A]
"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)
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