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EMERGING MARKETS-Mexico peso weakens as Trump casts doubt on NAFTA future

SAO PAULO, Aug 23 (Reuters) - The Mexican peso weakened on Wednesday after U.S. President Donald Trump cast doubt on the future of the North American Free Trade Agreement, reigniting fears of a regional trade war. Trump warned he might terminate the NAFTA pact with Mexico and Canada after three-way talks failed to bridge deep differences. The first round of negotiations ended on Sunday with little sign of any breakthrough coming. Trump's remarks put investors on alert after months of optimism over the trade talks, which had helped make the Mexican peso one of the world's best-performing currencies. "A deal remains our base case but the peso may lag with rising uncertainty, after a period where Trump fear has been almost fully priced out by the markets," Citigroup strategists wrote in a note to clients. The peso weakened as much as 1 percent on Tuesday before paring losses to around 0.3 percent. It is still up 17 percent this year. Brazil's benchmark Bovespa stock index rose slightly, extending the previous day's gains after breaching the 70,000 milestone for the first time since January 2011. The Brazilian real strengthened nearly 1 percent. Shares of Centrais Elétricas Brasileiras SA, however, fell 7 percent as traders booked profits from a 50 percent jump on Tuesday. A government proposal to privatize Eletrobras, as the power utility is known, fueled hopes of lower debts and higher efficiency at the firm, triggering a market-wide rally.

Key Latin American stock indexes and currencies at 1720 GMT:

Stock indexes daily % YTD % change change

Latest

MSCI Emerging Markets 1075.61 0.29 24.38 MSCI LatAm 2858.91 0.08 22.05 Brazil Bovespa 70363.59 0.5 16.83 Mexico S&P/BVM IPC 51190.40 -0.28 12.15 Chile IPSA 5112.43 -0.04 23.15 Chile IGPA 25552.27 -0.05 23.24 Argentina MerVal 23171.08 1.18 36.96 Colombia IGBC 10939.66 -0.18 8.01 Venezuela IBC 199408.72 0.7 528.95 Currencies daily % YTD % change change

Latest

Brazil real 3.1494 0.92 3.17 Mexico peso 17.7050 -0.22 17.16 Chile peso 640.8 -0.01 4.67 Colombia peso 2984.17 -0.01 0.58 Peru sol 3.237 0.03 5.47 Argentina peso (interbank) 17.2400 -0.15 -7.92 Argentina peso (parallel) 18.2 0.66 -7.58

(Reporting By Tom Brown)