EMERGING MARKETS-Latam currencies fall on euro zone uncertainty

(Updates prices, adds details)
* Investors worry EU summit will fail to solve debt crisis
* Expectations of cenbank intervention support Brazil real
* Real closes flat, Mexican peso falls 0.5 pct

By Natalia Cacioli
SAO PAULO, June 25 (Reuters) - Latin American currencies
weakened on Monday on fear that a summit of European leaders
later this week would do little to stop the euro-zone debt
crisis from spreading further and weighing on world economic
prospects.
The Mexican peso lost 0.5 percent while the Chilean
peso slumped 1.2 percent as investors pulled money from
emerging-market assets and rushed to the perceived safety of the
dollar, which gained around 0.4 percent against the euro.
In a sign of investors' growing aversion to risk, yield
spreads between emerging market government bonds and U.S.
Treasuries widened 7 basis points to 378 basis points, according
to JP Morgan's EMBI+ index. The index is on track for
its largest one-day spike since the beginning of the month.
The Brazilian real was an exception, however.
It traded lower during most of the session but closed
practically flat as investors feared the central bank could
intervene to support the currency.
"World stocks are falling and the euro is weakening sharply,
but the real is not reflecting those moves because investors
believe the central bank will intervene," said Italo dos Santos,
a manager at the currency desk of Icap brokerage in Sao Paulo.
The Brazilian central bank hasn't intervened in the foreign
exchange market with the sale of currency swaps since June 11,
but the mere possibility of central bank action has helped curb
the real's depreciation.
The real has weakened 2.2 percent so far in June, and
remains about 9.4 percent down since the beginning of the year.

RISING EURO UNCERTAINTY
Uncertainty related to the euro zone is poised to rise this
week, before European leaders meet in Brussels on Thursday and
Friday, in a bid to put an end to the crisis which on Monday
forced Spain to request a package worth up to 100 billion euros
to rescue its banks.
But hopes of faster fiscal integration in the euro zone, the
solution many investors would like to see, are fading as German
Chancellor Angela Merkel repeats her opposition to shared
liability for the region's debts.
"Markets remain very pessimistic and uncomfortable," said
Silvio Campos Neto, an economist with Tendencias consultancy in
Sao Paulo. "Investors are speculating that nothing will be
decided at the EU summit this week."

Latin American FX prices from Reuters at 21:20 GMT:

Currencies daily % year-to-d
change te %
Latest change
Brazil real 2.0660 0.06 -9.56

Mexico peso 13.9157 -0.46 0.39

Argentina peso* 5.9500 0.50 -20.50

Chile peso 508.8000 -1.18 2.06

Colombia peso 1,803.5500 -0.70 7.48

Peru sol 2.6610 -0.41 1.35

* Argentine peso's rate between
brokerages

(Additional reporting by Walter Brandimarte and Danielle
Assalve; Editing by Chizu Nomiyama and Andrew Hay)