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CORRECTED-EMERGING MARKETS-Mexican peso extends gains; Peru's sol plumbs new lows

 (Removes reference to Chilean central bank decision from
paragraphs 1, 9)
    By Susan Mathew
    June 8 (Reuters) - Mexico's peso extended gains on Tuesday
as sweeping changes to market-friendly policies seemed less
likely after midterm elections. 
    The Mexican peso extended gains to a third straight
session as the make-up of the lower house of the Congress
following Sunday's elections is seen as less conducive to
President Andres Manuel Lopez Obrador's reform plans. Markets
were especially worried about constitutional changes impacting
the energy sector and independent entities.
    "The main source of surprise in Sunday's election was (the
ruling party) MORENA's low vote count, relative to pre-election
polls... This, we think, should be interpreted as a hidden
rejection vote towards the ruling party by Mexican voters,"
Credit Suisse strategists wrote in a note. 
    The currency is up about 0.7% for the year thanks to a rally
since Friday which has seen it gain close to 2% so far.
    Peru's sol fell another 1%, after plunging 2.5% on
Monday, to new lows after a presidential election on Sunday.
Socialist Pedro Castillo held a slight lead over right-wing
rival Keiko Fujimori with 95% of the votes counted. Fujimori
alleged "irregularities" in the counting on Monday.
    The currency has lost almost 8% since Castillo's surprise
win in the first round vote in April. Ratings agency S&P on
Tuesday said it's too early to assess the fallout from election
uncertainty.
    Castillo on Monday sought to assuage markets, saying he
would respect the central bank's autonomy should he be elected.
A spilt vote could be a silver lining as it would make it
difficult for Castillo to pass dramatic reforms, analysts say.

    "As per article 116 of the Peruvian constitution, the next
president of Peru takes office on 28 July, 2021. Therefore, we
would expect that any legal challenges would need to be
addressed and resolved before that date," Credit Suisse said. 
    Chile's peso dipped 0.1%. Data on Tuesday showed
Chile's consumer prices rose 0.3% in May, while rolling 12-month
inflation hit 3.6%, within the central bank's target range of
2%-4%. 
    Brazil's real continued to pull back after
hitting six-month highs last week. 
    Data on Tuesday showed retail sales rose in April at their
fastest rate in more than 20 years, kicking off Latin America's
largest economy's second quarter on a strong footing.

    Consumer stocks, Via Varejo, Lojas Americanas
 and Magazine Luiza were among the top
gainers on Sao Paulo's Bovespa stocks index after the
data.
    
    Key Latin American stock indexes and currencies:
   Stock indexes           Latest    Daily %
                                     change
 MSCI Emerging Markets      1377.03    -0.26
                                     
 MSCI LatAm                 2668.57    -0.63
                                     
 Brazil Bovespa           130026.89    -0.57
                                     
 Mexico IPC                50874.74    -1.08
                                     
 Chile IPSA                 4158.49     0.66
                                     
 Argentina MerVal              0.00        0
                                     
 Colombia COLCAP            1244.72    -0.06
                                     
                                            
      Currencies           Latest    Daily %
                                     change
 Brazil real                 5.0560    -0.37
                                     
 Mexico peso                19.7673     0.16
                                     
 Chile peso                   717.4    -0.21
                                     
 Colombia peso               3604.2     0.03
                                     
 Peru sol                    3.9797    -1.08
                                     
 Argentina peso             95.0100    -0.03
 (interbank)                         
                                     
 

 (Reporting by Susan Mathew in Bengaluru;
Editing by Alistair Bell)
  
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