EMERGING MARKETS-Latam FX gains on Greek hopes, but gains limited

* Market eyes Fed meeting for possible stimulus
* Mexico's cenbank expects months of volatility
* Brazil's real off 0.6, Mexico's peso gains 0.6

By Rachel Uranga
MEXICO CITY, June 18 (Reuters) - Latin American currencies
mostly firmed on Monday on hopes that Greek political parties
were close to forming a coalition that backs an international
bailout, ending months of political paralysis at the center of
Europe's debt crisis.
But gains were limited by worries about the region's future
after the Spanish and Italian yields rose, underscoring concerns
that a pro-bailout victory in Greece was still far from enough
to solve Europe's troubles.
The Mexican peso jumped 0.69 percent to 13.8250 per
dollar on the news and the Brazilian real weakened 0.63
percent to 2.0566 per dollar. The real cut losses after a Greek
New Democracy party official told Reuters that a governing
coalition could be agreed upon by Tuesday, but the market's
optimism could be short lived..
"The formation of the government is only the first step to
start negotiation between the Greek government and the troika,"
said Pedro Tuesta, a foreign exchange analyst with 4Cast Inc in
Washington.
Fears about the euro zone's debt crisis spreading have
recently pressured Latin American currencies, with the Mexican
peso losing 6 percent since May and the Brazilian real weakening
about 8 percent.
Policymakers are under increasing pressure to come up with
concrete solutions to prevent the crisis from spreading and
hammering global markets.
"The weekend news has really just averted disaster instead
of giving anyone a shot of confidence," said Clyde Wardle, a
currency strategist at HSBC in New York. Investors are eyeing a
summit of European leaders at the end of June to offer concrete
solutions to stem the crisis.
"The market is clearly looking for something from this EU
summit to at least restore confidence in the short term, but
it's not clear what that will be," he said.
Mexico's central bank governor, Agustin Carstens, said on
Monday that the uncertainty in Europe is likely to keep Mexico's
currency volatile.
"It is probable that we are in this environment for some
more months," Carstens said in an interview with Radio Formula
in response to a question about the recent weakness of the
Mexican peso.
Market players looking for some relief are now turning their
immediate attention to the Federal Reserve's two-day meeting
that begins on Tuesday, Tuesta added.
Many market players are looking for further monetary
stimulus from the Fed, a move that tends to boost emerging
markets, as the U.S. economy shows signs of slowing.
In Chile, the central bank maintained its 2012 growth
expectations but cut its inflation forecast to 2.7 percent,
stating in a quarterly report the scenario assumes it holds its
benchmark rates steady.
The move had little affect on the currency, which
closed near flat at 499.50 pesos per U.S. dollar, but it could
give the bank more room to consider monetary easing, a move many
economist don't see as likely in the coming months.

Latin American FX prices from Reuters at 2133 GMT

daily % yearly %
change change
Latest
Brazil real 2.0566 -0.63 -9.23

Mexico peso 13.8250 0.69 1.05

Argentina peso* 5.8800 0.85 -19.56

Chile peso 499.5000 0.06 3.96

Peru sol 2.6450 0.19 1.97

* Argentine peso's rate between
brokerages