EMERGING MARKETS-Latam stock sink on European debt crisis fears

* Investors skeptical Obama will pull off jobs plan

* Brazil Bovespa down 3.2 pct, Mexico IPC 2.6 pct

(Recasts, adds comments and closing prices)

By Rachel Uranga and Michael O'Boyle

MEXICO CITY, Sept 9 (Reuters) - Latin American shares sank
on Friday as global equity markets tanked on fears a Greek
default could hobble major European banks and deepen a global
economic slowdown.

The MSCI Latin American stock index .MILA00000PUS fell
3.56 percent in its largest one-day percentage drop since
global equities tumbled in early August.

Analysts said a recent rally had been derailed. Renewed
fears about Europe could end up driving the region's stocks
back to their lowest since early August.

Investors feared investors holding Greek debt might not
respond positively to a bond swap offer despite assurances from
Greece that the offer was going well. [ID:nL5E7K905F]

A failure of the deal could lead to a Greek default and
hammer European banks holding the country's bonds.

Media reports Germany was preparing a plan to bailout its
banks in case of a default by Greece added to fears about
Europe's debt crisis. [ID:nIFR31j1T3]

The planned resignation of the top German on the European
Central Bank board laid bare friction over the ECB's policy to
help troubled euro zone debtor states through bond purchases.
[ID:nL5E7K91CF]

Unconfirmed terrorism threats against New York City and
Washington ahead of the 10th anniversary of the September 11
attacks added to nervousness in markets.

"This all set off a wave of speculation," said Juan Jose
Resindiz, head of analysis at brokerage Arka in Mexico City.
"All this combined to spark intense volatility."

Investors were skeptical U.S. President Barack Obama could
pull off his proposal from Thursday to boost U.S. job creation.
He faces an uphill battle to win support from opposition
Republican party members ahead of a 2012 election campaign.

Unemployment in the United States has been stuck above 9
percent and weak data has fanned fears of another U.S.
recession that would undermine demand for Latin America's
exports.

In Brazil, the benchmark Bovespa stock index dropped 3.2
percent .BVSP, cutting back the gains made after the central
bank's surprise 50 basis point interest cut late on Wednesday.
For more on the rate cut, click on [ID:nN1E78015G].

"Things are down because the outlook abroad is terrible.
The market got euphoric with the interest rate cut, but that
cut was due to an awful foreign outlook, which persists," said
Andre Perfeito, economist with Brazil's Gradual Corretora.

"There is some new disappointment after Obama's speech,
which was more about politics than economics. Given the lack of
a more sturdy economic scenario in the United States and
Europe, the bourse will keep falling," he said.

Shares of Brazil's state-run oil company Petrobras
(PETR4.SA) lost 2.47 percent and homebuilder PDG Realty
(PDGR3.SA) shed 6.75 percent.

Bucking the negative market trend in Brazil were shares of
Magnesita (MAGG3.SA), which traded up 4.33 percent after Credit
Suisse resumed coverage of the company with a "buy" rating and
per share price target of 11 reais.

Mexico's IPC stock index .MXX dropped 2.59 percent to
33,812.62 points as shares of America Movil AMX.MX lost 2.49
percent.

The index fell below a key support level at 34,000 points,
which coincided with the two-thirds retracement of the IPC's
August 2010 to Jauanry 2011 rally.

Further losses could send the index back toward its
one-year low hit in earlu August.

Chile's blue-chip IPSA index .IPSA 2.19 percent as
Santander Chile STG.SN shed 5.24 percent.

Local stocks were also hurt after the Chilean government
sent a bill to Congress on Friday that cuts maximum rates on
bank loans, a move bankers argue would hurt their business by
deterring lending to riskier customers.
(Additional reporting by Alexandra Ulmer in Santiago; Editing
by Andrew Hay)