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EMERGING MARKETS-Mexico peso down for fifth day ahead of NAFTA talks

SAO PAULO, Oct 10 (Reuters) - The Mexican peso weakened for a fifth straight trading day on Tuesday amid increasing tensions over Mexico's trade ties with the United States ahead of a new round of talks this week. Trade officials from Mexico, the United States and Canada meet on Wednesday in the Washington area for a fourth round of talks on renegotiating the North American Free Trade Agreement. On the eve of the talks, U.S. President Donald Trump warned again in an interview with Forbes that he would like to scrap the treaty that created one of the world's biggest trade blocs. Fears of increased U.S. protectionism have hit the Mexican peso particularly hard as the United States purchases over three-quarters of Mexico's exports. Strategists at BNP Paribas recommended clients extend hedging positions against volatility in the Mexican peso, citing "increasing noise surrounding the NAFTA negotiations." The peso slipped 0.2 percent to the weakest since early June, extending losses to 2.8 percent in five days. The decline contrasted with higher demand for emerging market assets worldwide, which rose for the first day in three after their recent weakness sparked bargain-hunting. Stronger-than-expected U.S. jobs data on Friday fueled expectations that U.S. interest rates may rise faster than expected in coming months, reducing the allure of high-yielding assets. The Brazilian real strengthened 0.3 percent on Tuesday, mirroring other emerging market currencies, such as the South African rand and the Russian rouble. Stocks in developed economies also rose, with Brazil's benchmark Bovespa stock index rebounding from a two-day loss. Financial shares led the advance, while shares in state-controlled oil company tracked oil prices higher. Planemaker Embraer, however, fell as much as 6.4 percent after reporting a decline in deliveries in the third quarter from the year before. Analysts at Banco BTG Pactual SA said the figures could be a sign of weaker-than-expected quarterly earnings.

Key Latin American stock indexes and currencies at 1720 GMT:

Stock indexes Latest Daily YTD pct pct change

change

MSCI Emerging Markets 1111.48 1.01 27.62 MSCI LatAm 2946.55 0.6 25.13 Brazil Bovespa 76630.38 1.19 27.24 Mexico S&P/BVM IPC 49932.99 -0.28 9.40 Chile IPSA 5467.14 -0.34 31.69 Chile IGPA 27356.72 -0.28 31.94 Argentina MerVal 27074.16 1.15 60.03 Colombia IGBC 11057.12 0.08 9.17 Venezuela IBC 531.11 0.65 -98.32 Currencies Latest Daily YTD pct pct change

change

Brazil real 3.1744 0.34 2.36 Mexico peso 18.7225 -0.23 10.80 Chile peso 628.4 0.78 6.73 Colombia peso 2954.4 -0.24 1.59 Peru sol 3.265 0.18 4.56 Argentina peso (interbank) 17.4200 0.23 -8.87 Argentina peso (parallel) 17.8 0.39 -5.51

(Reporting by Bruno Federowski; Editing by Tom Brown)