EMERGING MARKETS-Energy reform fears trip up Mexico's peso

    * Mexican peso on track for worst day in nearly a month
    * U.S. inflation spikes, risk assets under pressure
    * Brazil's service sector activity surges in May

 (Updates prices)
    By Ambar Warrick and Susan Mathew
    July 13 (Reuters) - Mexico's peso lost 1% on Tuesday on
concerns over more government interference in the energy sector,
while most other Latin American currencies fell as rising U.S.
inflation raised fears of monetary policy tightening by the
Federal Reserve.
    Mexican President Andres Manuel Lopez Obrador said he plans
to send a constitutional reform to Congress, widely opposed by
independent power firms and investors on grounds that it would
hurt competition.
    Given the president's majority in the Senate and Lower House
have been reduced after mid-term elections last month, a
consensus with the opposition could be difficult to reach, Citi
strategists said in a note, signaling more uncertainty.  
    The Mexican peso dropped as much as 1.1%, heading for
its worst day in nearly a month.
    Recent volatility in the oil market also weighed on the
peso. The International Energy Agency warned that while the oil
market could see tighter supply due to an OPEC+ dispute, there
remains a risk of a dash for market share.
    Brazil's real, meanwhile, erased losses as the
session progressed. Market experts remain fairly constructive on
the real to the year-end given economic growth in the country
has been wholly positive this year. But they warn of political
    Data on Tuesday showed services activity in Brazil grew
23.0% in May from last year.
    Most other currencies fell as the dollar rallied after data
showed U.S. consumer prices shot up at their highest rate in 13
years in June.
    A sustained spike in inflation could push prices above the
Fed's target inflation range and compel the U.S. central bank to
tighten policy earlier than anticipated. 
    Chile's peso lost 0.9% with a slide in prices of the
country's biggest export, copper, on declining China imports,
bolstering losses.
    Peru's sol inched closer to all-time lows, while
Colombia's peso slipped marginally. 
    In an update to Argentina's debt woes, the International
Monetary Fund said progress was being made in talks over the
roughly $45 billion owed to the Fund.
    Among stocks, Brazilian shares rose 0.6%, bucking
gloom in other regional benchmarks. Pharmaceutical company
Hypera topped Brazil's index after it said it
acquired 12 over-the-counter and prescription brands in Latam
from France's Sanofi for $190.3 million. 
    Key Latin American stock indexes and currencies:
   Stock indexes           Latest    Daily %
 MSCI Emerging Markets      1337.76     0.82
 MSCI LatAm                 2567.83     0.44
 Brazil Bovespa           128352.97     0.59
 Mexico IPC                49368.13    -0.85
 Chile IPSA                 4185.60    -1.36
 Argentina MerVal          64138.64   -0.119
 Colombia COLCAP            1292.89    -0.43
      Currencies           Latest    Daily %
 Brazil real                 5.1704     0.05
 Mexico peso                20.0467    -1.00
 Chile peso                   749.4    -0.88
 Colombia peso               3819.2    -0.03
 Peru sol                     3.976    -0.56
 Argentina peso             96.1200    -0.02

 (Reporting by Ambar Warrick;
Editing by Paul Simao and Dan Grebler)