EMERGING MARKETS-Mexican peso extends gains; Peru's sol steadies after plunge

    * Mexican peso extends gains to third straight session 
    * Peruvian sol stabilizes after hitting record lows
    * Brazilian retail sales surge in April

 (Adds details, bullets, updates prices throughout)
    By Susan Mathew and Shreyashi Sanyal
    June 8 (Reuters) - Mexico's peso extended gains on Tuesday
as sweeping changes to market-friendly policies seemed less
likely following mid-term elections, while the Peruvian sol
stabilized after falling to fresh record lows. 
    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 agenda. 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 1% for the year thanks to a rally
since Friday.
    Peru's sol was flat after falling another 1% earlier
in the session to new lows following a presidential election on
Sunday. Socialist candidate 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
    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
    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%
to 4%. 
    Brazil's real continued to pull back after
hitting six-month highs last week. 
    Data on Tuesday showed Brazilian 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 index after the data.
    Key Latin American stock indexes and currencies at 1918 GMT:
       Stock indexes               Latest    Daily %
 MSCI Emerging Markets              1376.73    -0.28
 MSCI LatAm                         2670.63    -0.56
 Brazil Bovespa                   129484.05    -0.99
 Mexico IPC                        50944.56    -0.94
 Chile IPSA                         4158.47     0.66
 Argentina MerVal                  66328.40   -2.675
 Colombia COLCAP                    1253.48     0.65 Currencies               Latest    Daily %
 Brazil real                         5.0342     0.07
 Mexico peso                        19.7137     0.43
 Chile peso                           717.3    -0.20
 Colombia peso                      3592.35     0.36
 Peru sol                            3.9248     0.30
 Argentina peso (interbank)         95.0100    -0.03
 Argentina peso (parallel)              153     2.61
 (Reporting by Susan Mathew and Shreyashi Sanyal in Bengaluru;
Editing by Alistair Bell and Paul Simao)