(Recasts, adds quote and updates prices) SAO PAULO, May 2 (Reuters) - Markets across Latin America were down on Wednesday as trade tensions simmered in Brazil and Mexico, the region's two biggest economies, while Argentina's peso slid to a record low. The United States cut off metals tariff talks with Brazil, contradicting an earlier U.S. announcement that the two countries had reached a permanent exemption from steel and aluminum import tariffs. In Mexico, both the peso currency and stock exchange fell on Wednesday, in part weighed down by continued uncertainty over unresolved talks to update the North American Free Trade Agreement (NAFTA) with the United States and Canada. The MSCI Emerging Markets Latin America Index , a benchmark for the region's major economies, was down 2.6 percent. "In Mexico, you are having (presidential candidate Andres Manuel) Lopez Obrador doing well in the polls and the market was significantly long the Mexican peso; that’s a very crowded position. In Argentina you have a run against the currency as investors lost confidence on the monetary-fiscal policy mix," said Claudio Irigoyen, head of Latin America economics and fixed income strategy at Bank of America Merrill Lynch. Argentina's peso closed on Wednesday down 3.11 percent to trade at an all-time low of 21.2 pesos per U.S. dollar, following a surprise rate hike by the South American country's central bank. While the bank sold some $400 million in the foreign exchange market as of early afternoon to halt the slide, the currency's sustained weakening pointed to a lack of investor confidence in Latin America's third-biggest economy, which suffers one of the world's highest inflation rates. In Brazil, the Bovespa fell 1.8 percent, led by losses at Brazil's largest bank Itau. Bucking the regional trend, Colombia's IGBC index was mostly flat. Key Latin American stock indexes and currencies at 2020 GMT: Stock indexes Latest Daily pct YTD pct change change MSCI Emerging Markets 1,150.84 -0.83 0.17 MSCI LatAm 2,896.72 -2.56 5.11 Brazil Bovespa 84,547.09 -1.82 10.66 Mexico IPC 47,809.98 -1.13 -3.13 Chile IPSA 5,695.02 -0.28 2.34 Chile IGPA 28,648.74 -0.18 2.39 Argentina MerVal 29,657.56 -1.16 -1.36 Colombia IGBC 12,427.18 0.1 9.29 Venezuela IBC 21,710.28 -2.28 -31.52 Currencies Latest Daily pct YTD pct change change Brazil real 3.5516 -0.11 -6.71 Mexico peso 19.0950 -0.76 3.16 Chile peso 618.5 -0.92 -0.62 Colombia peso 2,832.5 -1.13 5.28 Peru sol 3.268 -0.49 -0.95 Argentina peso (interbank) 21.1700 -2.98 -12.14 Argentina peso (parallel) 21.05 -0.81 -8.65 (Reporting by Paula Arend Laier, Gram Slattery and David Alire Garcia Editing by James Dalgleish)