LATAM WEEKAHEAD-Mexico to cut rates as economy slumps

By Walter Brandimarte

NEW YORK, July 12 (Reuters) - Latin American investors will focus this week on an expected interest rate cut by the Mexican central bank, which is seen finishing its monetary easing cycle this month even as indicators show the economy continues to slump.

Policy makers are expected to cut Mexico's base interest rate by a quarter percentage point on Thursday, leaving it at 4.5 percent for some time as they reassess the impact of the recent monetary easing on the economy.

For now, however, activity indicators will show no sign of recovery. Analysts expect Mexico's industrial production numbers for May, also due on Thursday, to plunge 10.7 percent, after a 13.6 percent decline in the previous month.

"Industrial production is still seen very week in May, dragged down by lingering sluggishness in the U.S. industrial sector, particularly automotive," RBC Capital Markets' analysts said in a research note.

The following are some key data points investors will be watching this week:

Tuesday July 14:

* Brazil - May retail sales: Barclays Capital expects a 0.8 percent increase in sales month-on-month, after a 0.2 percent percent fall in the previous period. Year-on-year, the bank forecasts a deceleration to a growth rate of 4.0 percent from 6.9 percent.

Wednesday July 15:

* Peru - May GDP: Morgan Stanley expects a contraction of 0.8 percent year-on-year, following a 2.0 percent decline in the previous period.

Thursday July 16:

* Colombia - May industrial production: Barclays Capital expects a 6.4 percent decline in the number year-on-year, following a 14.5 percent plunge in the previous month.

"Our forecast is consistent with a sequential improvement in industrial production during the second quarter but still-sluggish consumption," the bank said in a report. (For a real-time schedule of upcoming economic indicators in Latin America, see ECONLATAM) (Editing by Leslie Adler and Diane Craft)