EMERGING MARKETS-Debt spreads narrowest since September

* Debt spreads tighten to September levels

* Appetite for EM assets still strong

* US mixed data excuse to take profits

By Manuela Badawy

NEW YORK, Aug 4 (Reuters) - Emerging sovereign debt spreads
on Monday tightened to levels not seen since September, while
regional stock markets rose and currencies appreciated slightly
as investors took on risk.

A rise in pending sales of existing U.S. homes gave some
temporary support to the U.S. stock market a day after a global
rally across asset classes on signs of economic recovery.

However, the biggest drop in U.S. incomes in 4 1/2 years
and a rise in consumer spending in June, partly due to higher
gasoline prices, drove market players to take some profits
after Monday's highs. [ID:nN04453698]

Investors' appetite for high-yield, high-risk assets was
reflected in yield spreads between emerging market bonds and
U.S. Treasuries.

The spread, which measures the additional yield developing
countries have to pay to raise money abroad, tightened 12 basis
points to 353 basis points over comparable U.S. Treasuries, its
narrowest level since late September, according to the JPMorgan
EMBI+ index 11EMJ.

"The data is coming mixed, and the local markets will
mainly improve if data from abroad turns out better," said Jose
Simao, a senior trader with brokerage Intrader in Sao Paulo.

Latin American stocks were a tad higher while currencies
were flat to slightly stronger

The MSCI stock index for Latin America .MILA00000PUS rose
0.44 percent while Brazil's benchmark Bovespa index .BVSP
rose 0.46 percent to reach 56,310.96 its highest level since
last August.

Mexico's IPC stock index .MXX rose as much as 1.17
percent to 28,015, its highest level since July 2008, supported
by Wal-Mart de Mexico earnings expectations.

Brazil's currency, the real BRBY gained 0.44 percent to
1.826 reais per dollar while Mexico's peso MXN=MEX01 edged
lower 0.06 percent to 13.138 pesos per dollar.

The Mexican currency had gained close to 5 percent since
mid-July on bets the U.S. recession is easing, but further
gains have been limited on concerns that credit ratings
agencies will downgrade Mexico's debt due to weaker fiscal
accounts.

Colombia's peso COP=RR appreciated 0.82 percent to 1,992
per dollar on a hunt for risk as well as a pause in tensions
with its neighbor, Venezuela.
(Additional reporting by Guillermo Parra-Bernal in Brazil and
Michael O'Boyle in Mexico; Editing by Kenneth Barry)