UPDATE 2-G20 to urge members to act against economic uncertainty
* Mexican deputy says uncertainty costing growth
* Says G20 has to prove that firewalls are there to be used
* Declines to say directly if Spain should seek aid
MEXICO CITY, Oct 26 (Reuters) - The Group of 20 leading nations will urge countries to make the most of safety nets, including Europe's bailout fund, to limit uncertainty in the global economy when policymakers meet early next month, Mexican Deputy Finance Minister Gerardo Rodriguez said on Friday.
Mexico will host finance ministers and central bankers from the bloc of advanced and developing countries next weekend at a meeting that is expected to focus heavily on Europe's ongoing debt crisis, with Spain tipped as the next country to seek aid.
Rodriguez declined to say directly whether Spain should ask for a financial rescue from its European partners but stressed that safety nets, such as Europe's 500 billion euro ($646.57 billion) bailout fund, were meant to be used.
``The G20 urges countries to take action to reduce the environment of uncertainty,'' he said, adding that one of these actions could be activating existing firewalls.
``The G20 has to show the market and the players that all this effort in setting up the famous firewalls has created firewalls which are effective, and to test that they are effective they need to be used.''
Spain is under pressure to seek a bailout as it struggles to cope with high government debt. The euro zone has already set aside 100 billion euros for Spain to recapitalize its banks, and euro zone sources said they expected Spain to seek aid in November.
If Spain were to apply for help from the European Stability Mechanism, that would allow the European Central Bank to step in with massive Spanish bond purchases on the secondary market and lower Madrid's borrowing costs.
Spain's economy minister, Luis de Guindos, will attend the G20 meeting on Nov. 4 and 5 as a guest.
``This will be an opportunity to give everyone an update on what they are thinking and if they will make any decisions in the short term,'' Rodriguez said.
World finance leaders met just two weeks ago in Tokyo, where they urged Europe and the United States to tackle debt which threatens to stifle global growth.
The International Monetary Fund cut its forecast for global growth to 3.6 percent for 2013 and urged the United States to take steps to avoid a year-end fiscal cliff of tax hikes and spending cuts that could tip the country back into recession.
But Rodriguez said with U.S. presidential elections scheduled the day after the G20 meeting ends, there was unlikely to be fresh pressure for action.
``Markets have so far given the benefit of the doubt that it will resolve the challenge of the fiscal cliff adequately,'' he said. ``Everyone is in wait-and-see mode, and we'll see after the elections how they can progress in talks with Congress.''
He added that foreign exchange flexibility remained an important subject for the G20.