EMERGING MARKETS-Mexico peso dips on fears of China-U.S. trade war

(Updates prices) BRASILIA, April 2 (Reuters) - The Mexican peso weakened on Monday after China slapped tariffs on several U.S. products as retaliation against U.S. protectionism, fueling concerns of a trade war between the world's two biggest economies. China raised tariffs by up to 25 percent on 128 products from frozen pork and wine to fruits and nuts. Soon after the announcement, an editorial in the widely read Global Times newspaper warned that if the United States had thought China would not retaliate or would only take symbolic counter-measures, it could "say goodbye to that delusion." The measure drove traders to sell risky assets and seek protection on the U.S. dollar. Currency markets in Mexico, itself embroiled in thorny trade negotiations with U.S. President Donald Trump's administration, were among the most affected. The peso "will need some positive news from NAFTA negotiations in April and a change in the trend in presidential polls, to make inroads to below 18.00 (pesos to the dollar), otherwise, we may see ourselves looking at 19.00 again," strategists at Continuum Economics wrote in a client note. However, the peso narrowed its losses after Bloomberg reported that Trump's administration was working to reach a preliminary deal to modernize the North American Free Trade Agreement ahead of the Summit of the Americas, which begins in Peru on April 13. The peso was trading at 18.26 to the dollar in afternoon trading, down 0.55 percent. Volumes were thin in the region as traders returned from the Easter holiday-lengthened weekend. Local factors drove some gains in stock markets, though risk-aversion curbed the advance. Brazil's benchmark Bovespa stock index slipped, however, to end 0.8 percent lower. Earlier shares of miner Vale SA had jumped on the heels of a new dividend policy. Meatpacker BRF SA also rose as traders bet it could benefit from China's tariffs on U.S. pork exports.

Latin American stock indexes at 1956 GMT:

Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1217.67 0.58 4.51 MSCI LatAm 3007.28 -0.32 6.67 Brazil Bovespa 79831.76 0.1 4.49 Mexico IPC 49510.15 0.25 0.32 Chile IPSA 5745.95 0.22 3.26 Chile IGPA 28911.17 0.28 3.33 Argentina MerVal 33542.68 -0.24 11.56 Colombia IGBC 11727.78 1.47 3.14 Venezuela IBC 2324.29 17.01 84.01

(Reporting by Bruno Federowski; additional reporting by Julia Love; editing by Grant McCool and James Dalgleish)