* Slow U.S. growth raises chance of new Fed expansion
* Expectation U.S. may adopt QE3 plan lifts currencies
* Brazil's real, Chile, Mexico, Colombia pesos firm
* Brazilian, Mexican currencies close week stronger
(Refiles to correct currency in last paragraph)
By Jeb Blount
RIO DE JANEIRO, May 27 (Reuters) - Latin American currencies firmed against the U.S. dollar on Friday on speculation slow U.S. growth may lead central bankers in the world's largest economy to extend a flood of cheap capital.
The region's currency and asset prices have faltered in recent weeks on concern that the U.S. Federal Reserve will end "quantitative easing" debt purchases begun in 2008 that have pumped more than $2 billion into the world economy.
The second $600 billion part of the program, known as QE2, is scheduled to end in June.
"I see today's gains as almost entirely the result of speculation that QE2 will be followed by a QE3, said Luis Otavio Souza Leal, chief economist with Banco ABC Brasil SA in Sao Paulo.
"The U.S. numbers are not good and people are betting that the Fed will push money into the U.S. and world economies for a longer period than first thought."
Brazil's real BRBY firmed 0.99 percent to 1.604 to the dollar and finished the week 0.9 percent stronger than last Friday, its second week of gains. Mexico's peso strengthened 0.57 percent to 11.6010 ending the week 0.3 percent stronger.
Chile's peso CLP= gained 0.55 percent to 476.70 per dollar, unchanged from a week earlier.
Colombia's peso COP= firmed 0.31 percent to 1,820.10, trimming losses on the week to 0.3 percent.
Speculation about a QE3 came after the U.S. government on Thursday said corporate profit fell for the first time in two years and jobless claims rose. An expected upward revision of first quarter growth also failed to materialize. [ID:nN26233734]
On Friday the U.S. said consumer spending was an inflation-adjusted 0.1 percent in April, a result considered stagnant.
Brazil's finance minister Guido Mantega also said on Friday he expected Brazil's real to weaken with the end of QE2 in June. This would take pressure off manufacturers. They have seen a 14-percent, 12-month gain in the real reduce the competitiveness of their goods in export markets.
Investors though, are betting against Mantega. In recent days they've boosted bets on a stronger real.
One-month non-deliverable forwards BRL1MNDFOR= posted their biggest one-day gain in more than seven weeks on Friday, strengthening 1.4 percent to 1.6040 to the dollar.
The contract, traded and settled offshore in dollars, reflects expectations for the exchange rate in 30 days.
In Brazil, the net short-dollar position -- or the excess of bets that the real currency will gain on the dollar over those that it will weaken -- has nearly doubled from a month ago to $18.8 billion on Sao Paulo's BM&F exchange.
Net dollar shorts had fallen to $9.7 billion in late April thanks to taxes imposed by Mantega on short-term capital flows. It now approaches the April 1 record high of $20 billion.
"People are figuring their way around Mantega's measures and piling back into the real," said Andre Ferreira head of foreign exchange at Sao Paulo's Futura brokerage.
Concerned about the real's gains, the central bank on Friday, intervened twice in the spot market to buy dollars. It's the first time that it's held two auctions since May 17.
It also said it may hold a reverse currency swap auction Tuesday. The intervention, if it happens, will allow the central bank to put pressure on the real to weaken using an operation that mimics buying dollars in the futures market.
Editing by Diane Craft