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EMERGING MARKETS-Mexican and Argentine currencies fall amid index gains

(Updates prices) SAO PAULO/MEXICO CITY, Dec 26 (Reuters) - Mexico's peso on Tuesday slid to its weakest level in almost 10 months due to ongoing concerns over inflation and the potential impact of new U.S. corporate tax cuts. The Argentine peso also weakened on Tuesday, reaching an all-time low due to seasonal demand for U.S. dollars. Shares, however, hit a record high after Argentina's Congress approved key business-friendly legislation. The Brazilian real and Chilean peso were the only key Latin American currencies to strengthen. Mexico's peso rebounded briefly on Tuesday after Mexico's central bank sold $500 million in foreign exchange hedges to curb exchange rate volatility, but later dipped to its weakest level since March 3. U.S. President Donald Trump signed a tax overhaul into law on Friday that cut the corporate tax rate to 21 percent from 35 percent, fueling worries that Mexico would lose out on investment to its northern neighbor. Trump's threats to tear up the North American Free Trade Agreement (NAFTA) if he cannot renegotiate it in favor of the United States have also weighed on the peso. Mexico's presidential election due in July 2018 has stoked further uncertainty, and analysts say the peso could see extended periods of volatility in coming weeks. In Argentina, lawmakers last week approved a pension reform despite days of demonstrations by the bill's opponents, while the legislature's lower house approved a plan for cutting corporate income and employer social security taxes. Those actions helped push Argentina's benchmark MerVal index to close 0.98 percent above the previous session in its sixth consecutive day of gains. Trading in other Latin American markets was muted between the Christmas and New Year's holidays. Shares in Brazilian planemaker Embraer SA rose 6.20 percent on lingering expectations of a potential tie-up with Boeing Co, as the benchmark Bovespa stock index climbed to its highest level since October. Boeing on Friday sought to calm Brazilian concerns about the possible deal after President Michel Temer and other officials warned they would veto any full takeover bid.

Key Latin American stock indexes and currencies at 2032 GMT:

Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1139.26 -0.16 32.34 MSCI LatAm 2783.25 0.08 18.81 Brazil Bovespa 75707.73 0.69 25.70 Mexico IPC 48419.71 0.07 6.08 Chile IPSA 5514.74 -0.41 32.84 Chile IGPA 27745.20 -0.38 33.81 Argentina MerVal 29216.22 0.98 72.69 Colombia IGBC 11260.98 0.1 11.19 Venezuela IBC 1266.26 0.64 -96.01 Currencies daily % YTD % change change

Latest

Brazil real 3.3095 0.10 -1.82 Mexico peso 19.8855 -0.93 4.32 Chile peso 618.79 0.65 8.39 Colombia peso 2965 -0.27 1.23 Peru sol 3.24 -0.15 5.37 Argentina peso (interbank) 18.3200 -1.26 -13.35 Argentina peso (parallel) 18.85 -2.92 -10.77

(Reporting by Bruno Federowski; Additional reporting by Miguel Gutierrez and Daina Beth Solomon; editing by Diane Craft; Editing by G Crosse)