EMERGING MARKETS-Mexico rate futures down on central bank hint

 (Add analyst comment, updates prices)
    By Bruno Federowski
    SAO PAULO, June 23 (Reuters) - Yields paid on Mexican
interest-rate future contracts fell on Friday after the central
bank signaled it would not increase borrowing costs any further.
    In an unexpectedly divided decision, Banco de México raised
its benchmark rate by a notch to 7 percent, as forecast by all
17 analysts surveyed by Reuters last week. One member voted to
hold rates.
    In its policy statement, the bank said "the reference rate
has reached a level that is consistent with the process of
efficient convergence of inflation to the 3 percent target,"
hinting that further increases are no longer necessary.
    "The market shows they could cut as soon as December, but we
don't think the bank will move that fast," said Salvador Orozco,
a strategist at Santander in Mexico City.
    Economists at Morgan Stanley said it was premature to expect
cuts soon. "Mexico is still not out of the inflation woods,"
they wrote. 
    Rate-future prices indicated a nearly 100 percent
probability that the central bank will keep its reference rate
at 7 percent in its August meeting and showed that the market is
betting on a cut in December.
    The yield on Mexico's benchmark 10-year peso denominated
bond bid down 27 basis points to 6.67 percent, its
biggest one-day drop in two years. 
    Despite fading expectations of further policy tightening,
the Mexican peso strengthened 0.6 percent, tracking an
increase in crude prices. Mexico is a major oil exporter.
    Brazil's benchmark Bovespa stock index slipped.
Shares of power utility Centrais Elétricas Brasileiras SA
 fell nearly 5 percent as traders booked gains from a
rally on Thursday triggered by optimism over its restructuring
    Latin American stock indexes and currencies at 2115 GMT:
 Stock indexes                                  daily   YTD %
                                      Latest        %  change
 MSCI Emerging Markets                1011.67    0.28   17.33
 MSCI LatAm                           2493.23    0.34    6.52
 Brazil Bovespa                      61087.14    -0.3    1.43
 Mexico IPC                          48980.78   -0.07    7.31
 Chile IPSA                           4766.20    0.19   14.81
 Chile IGPA                          23878.79    0.17   15.17
 Argentina MerVal                    21066.14    0.32   24.52
 Colombia IGBC                       10628.45   -0.13    4.94
 Venezuela IBC                      120565.95   -0.21  280.27
 Currencies                                     daily   YTD %
                                                    %  change
                                       Latest  change  
 Brazil real                           3.3385   -0.11   -2.68
 Mexico peso                            18.01    0.61   15.18
 Chile peso                             660.5    0.47    1.54
 Colombia peso                        3018.94    0.12   -0.58
 Peru sol                               3.255    0.15    4.88
 Argentina peso (interbank)           16.1750   -0.09   -1.85
 Argentina peso (parallel)              16.51    0.12    1.88
 (Editing by Sandra Maler)