* LatAm assets fall on view Fed closer to raising rates

* Brazil Bovespa gains on expected rate cut this week

By Walter Brandimarte

NEW YORK, June 8 (Reuters) - Latin American financial
markets edged lower on Monday as worries that the U.S. Federal
Reserve could raise interest rates earlier than expected curbed
demand for high-yielding assets.

Brazilian and Mexican stock markets closed higher, however,
as Wall Street erased most of its losses in late trade. Stocks
in Brazil were also supported by an expected interest rate cut
by the country's central bank later this week.

Overall, market losses in Latin America broadly reflected
further profit taking from a three-month rally that had brought
regional stocks to eight-month highs on June 1.

"The market is just taking a breather," said Raffi
Dokuzian, superintendent at the Sao Paulo-based Banif
brokerage. "The pessimistic are afraid the Fed can raise
interest rates."

The MSCI stock index for Latin America .MILA00000PUS fell
0.71 percent, while Chile's blue-chip IPSA index .IPSA
declined 0.51 percent and Argentina's MerVal slipped
0.78 percent.

The Brazilian benchmark Bovespa index .BVSP rose 0.54
percent, as investors focused on an expected interest-rate cut
of at least 75 basis points by the central bank on Wednesday.

The Mexican IPC index .MXX ended 0.08 percent up, in line
with the Dow Jones industrial average's .DJI flat close.

Also underscoring the strong ties between the Mexican and
the U.S. economy, Mexico's automobile production feel 39.4
percent in May compared to the same month a year earlier,
mostly hurt by slumping demand from the United States. For
details, see [ID:nN08326802].

All Latin American currencies posted losses as the dollar
strengthened on speculation the Fed may rise interest rates
sooner than expected.

The Mexican peso MXN= led losses in the region, weakening
1.26 percent to 13.46 per U.S. dollar. The Colombian peso
COP=RR came next, with losses of 1.33 percent to 2,091.80.

The Brazilian real (BRBY: Quote, Profile, Research) lost 0.41 percent to 1.966 per
greenback.

Yield spreads between emerging market currencies and U.S.
Treasuries, seen as a gauge of investors' aversion to risk,
remained flat at 416 points, according to the JPMorgan EMBI+
index 11EMJ.
(Additional reporting by Aluisio Alves; Editing by Leslie
Adler)