EMERGING MARKETS-LatAm stocks dip, Mexican peso 17-mth high

* MSCI's Latin American stock index drops

* Mexican peso at 17-month high after US rate decision

* Brazil shares slip ahead of Copom rate meeting

By Daniel Bases

NEW YORK, March 17 (Reuters) - Latin American stocks turned
in a mixed performance on Wednesday while investors continued
to bid up regional currencies against the U.S. dollar a day
after the U.S. Federal Reserve left interest rates unchanged.

MSCI's Latin American stock index .MILA00000PUS was off
0.13 percent at 4,167.74 while the broader MSCI emerging
markets stock index .MSCIEF rose 1.45 percent to 991.48.

In the credit markets, yield spreads narrowed by 3 basis
points to 260 basis points between emerging market sovereign
bonds and benchmark U.S. Treasuries, according to the JPMorgan
Emerging Markets Bond Index Plus 11EMJ.JPMEMBIPLUS.

The Mexican peso reached a 17-month high in the wake of
Tuesday's Fed decision which reiterated the stance on low
interest rates for an extended period of time while also giving
a nod to an improving economic recovery.

Low interest rates for the U.S. economy makes emerging
market currencies more attractive given their yields are
higher.

The peso MXN=MEX01 gained 0.62 percent to 12.44 per
U.S. dollar and hit its strongest level since Oct. 15, 2008.

Mexico's peso has gained more than 6 percent from a low in
February as a rebound in exports helps it outperform other
emerging market currencies.

"The economy seems to be fairly solid and the Fed just
signaled that they are not hiking for awhile, so I think that
is all supporting the currency," said Gerardo Margolis, vice
president of emerging markets trading at TD Securities in
Toronto.

Rates in Brazil may or may not change when Brazil's
monetary policy committee, the Copom, meets later on
Wednesday.

Nearly half of the economists polled by Reuters, 13 out of
31, expect the Copom BRCBMP=ECI to keep interest rates steady
at 8.75 percent while 13 see a 50 basis point increase. The
remainder see interest rates increased later in the year.
[ID:nSPG002795]

The rate announcement is expected after 6 p.m. local time
(2100 GMT).

Ahead of that the Brazilian real was up slightly against
the greenback, trading at 1.7660 for a 0.11 percent gain on the
day (BRBY).

Traders said the Bovespa stock index .BVSP edged down
0.31 percent as caution crept into the market ahead of the
Copom decision.

Another disappointing note on the day in Brazil's markets
was a decision by OSX Brasil, the oil services and shipbuilding
company run by billionaire Eike Batista slashed its initial
public offering by two-thirds.

Batista is betting on a boom in Brazil's offshore oil
deposits, however skittish investors balked at paying a high
price for a start-up with no revenue. [ID:nN17145783]

"The issue was clearly the price," said a fund manager who
pulled out from the deal and requested anonymity. "There is a
jittery feeling among (large investors), and that probably
weighed on the transaction."

(Additional reporting by Michael O'Boyle in Mexico City,
Luciana Lopez and Elzio Barreto in Sao Paulo)