EMERGING MARKETS-Mexico peso firms, Chile dips in thin trade

MEXICO CITY, April 21 Mon Apr 21, 2014 3:24pm EDT

MEXICO CITY, April 21 (Reuters) - Latin American currencies traded mixed on Monday with Mexico's peso firming along with U.S. stock markets, while Chile's peso slipped amid bets of further interest rate cuts ahead.

Trading was thin following the Easter holiday, with markets in Latin America's top economy Brazil still closed.

Chile's peso slipped 0.11 percent in the first trading session since the country's central bank paused last Thursday after a recent cycle of interest rate cuts, but policymakers held the door open to further cuts ahead if economic growth continues to cool.

Chile's peso has slumped about 11 percent since the central bank began cutting borrowing costs last year and dropped its benchmark rate by 100 basis points to 4 percent.

Lower interest rates reduce the appeal of emerging market assets to global investors.

Mexico's peso firmed 0.15 percent to 13.0260 per dollar as stocks in the United States, Mexico's top trading partner, rose modestly after a strong rally last week.

Mexico's central bank is expected to hold its main interest rate steady at 3.50 percent on Friday as easing inflation pressures give policymakers room to leave borrowing costs low to support an economic recovery.

Mexican stocks fell 0.34 percent as shares in copper miner Grupo Mexico shed nearly 2 percent.

Stocks in Chile lost 0.22 percent as retailer Falabella lost 1.8 percent. (Reporting by Michael O'Boyle; Editing by Chris Reese)