(Recasts throughout, updates stock and currency prices, adds quote) By Aaron Saldanha Nov 8 (Reuters) - Latin American stocks fell on Thursday as Mexican stocks saw their biggest daily drop in seven years after a senator from the incoming party presented a proposal to stop banks from charging commissions for certain services such as cash withdrawals from ATMs. This comes less than two weeks after Mexico's President-elect Andrés Manuel López Obrador's government decided to scrap plans for an partially built airport project for Mexico City. Mexico's peso weakened 1.6 percent to see worst session in more than a week, contrasting with a flat day for MSCI's index of Latin American currencies. While the U.S. Federal Reserve left rates unchanged, as markets expected, it said strong jobs and spending was keeping the economy on track, setting the stage for a rate hike in December. Mexico's equity benchmark slid 5.8 percent, far exceeding a 2.8 percent fall in MSCI's index of Latin American stocks, the regional benchmark's worst day in two and a months. Grupo Financiero Banorte slumped nearly 12 percent to see their worst day in more than nine years, while Banco Santander Mexico dropped 8.1 percent. "If you take a look at how the banks in the Mexican stock exchange have traded, that tells you a lot!," said Andres Jaime, an EM quant strategist with Morgan Stanley. "It seems from a technical point of view, a lot of them (the proposals) don't necessarily make sense, that is why the market is worried. When you have such combinations, the probability of a policy mistake is much higher – policy mistakes are expensive." Brazil's real weakened 0.8 percent while the Bovespa stock index dropped 2.4 percent as all sectors fell. Shares of state controlled oil firm Petrobras fell 3.6 percent, with Brent oil prices declining 1.8 percent. One of the Bovespa's top losers was Estacio Participacoes SA , down 8.4 percent. Morgan Stanley cuts its target price on the educational services provider by about a tenth to 32.9 reais a share. Despite a strong dollar, Argentina's peso firmed about 0.5 percent. Central bank chief Guido Sandleris said the country was close to striking a new currency exchange deal with China, worth the equivalent of $8.7 billion. Key Latin American stock indexes and currencies at 2146 GMT Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 993.53 -0.44 -14.24 MSCI LatAm 2642.91 -2.82 -6.55 Brazil Bovespa 85620.13 -2.39 12.07 Mexico IPC 44190.25 -5.81 -10.46 Chile IPSA 5227.57 0.12 0.12 Argentina MerVal 30736.41 -2.13 2.23 Colombia IGBC 12432.06 -0.79 9.33 Currencies daily % YTD % change change Latest Brazil real 3.7603 -0.60 -11.89 Mexico peso 20.1840 -1.59 -2.40 Chile peso 677.3 -0.19 -9.25 Colombia peso 3151.08 -0.76 -5.37 Peru sol 3.364 -0.06 -3.78 Argentina peso 35.4500 0.65 -47.53 (interbank) (Reporting by Aaron Saldanha in Bengaluru; editing by Diane Craft)
Our Standards: The Thomson Reuters Trust Principles.