SAO PAULO, Feb 20 (Reuters) - Latin American currencies weakened on Tuesday as the U.S. dollar strengthened worldwide after hitting a three-year low last week. Currencies from Brazil, Mexico and Colombia weakened between 0.3 percent and 0.9 percent. The Chilean peso was barely changed as profit-taking partially offset the global upswing in the U.S. currency. Concerns that the United States could pursue a weaker dollar policy and by mounting worries about the U.S. budget deficit have driven the dollar sharply lower this year. Some investors turned to bargain hunting on Tuesday, however, ahead of a series of U.S. debt auctions. Stock markets in the region were mostly up, with Brazil's benchmark Bovespa stock index leading gains even after policymakers ditched a plan to curb social security spending. Investors saw the plan as key to boosting long-term economic growth, but had mostly given up on it after months of wrangling in Congress failed to advance the unpopular bill. "Markets already expected that the pension reform would be buried," said Ricardo Silva, a trader at Correparti brokerage. Moody's Investors Service on Tuesday said the government's decision was credit negative and will "severely restrict" policymakers' abilities to comply with budget rules.
Shares in power utility Centrais Elétricas Brasileiras SA were the biggest gainers on the benchmark index as investors bet the government would turn its efforts to the privatization of the state-owned company.
Key Latin American stock indexes and currencies at 1715 GMT:
Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1196.64 -0.37 3.68 MSCI LatAm 3128.86 0.58 10 Brazil Bovespa 86124.40 1.57 12.73 Mexico IPC 48671.68 -0.52 -1.38 Chile IPSA 5660.67 0.56 1.73 Chile IGPA 28427.49 0.39 1.60 Argentina MerVal 33080.72 -0.6 10.03 Colombia IGBC 11786.72 0.84 3.66 Currencies daily % YTD % change change
Brazil real 3.2425 -0.29 2.18 Mexico peso 18.6335 -0.53 5.72 Chile peso 594 0.10 3.48 Colombia peso 2857.78 -0.86 4.35 Peru sol 3.252 -0.18 -0.46 Argentina peso (interbank) 19.8500 -0.38 -6.30 Argentina peso (parallel) 20.15 0.40 -4.57
(Reporting by Bruno Federowski; Editing by Jonathan Oatis)