* Petrobras hurts Bovespa, Mexico's rebalancing hit shares
* Brazil Bovespa off 0.62 pct, Mexico IPC down 0.63 pct
By Danielle Assalve and Rachel Uranga
SAO PAULO/MEXICO CITY, Aug 21 (Reuters) - Latin American shares slipped on Tuesday, tracking a narrow fall in U.S. markets with Brazil's benchmark Bovespa index hitting resistance and weighed down by state-owned oil giant Petrobras.
The MSCI Latin American stock index slipped 0.43 percent, falling for the third straight session to 3,653.92.
Latin American stocks had risen early in the session, buoyed by speculation that the European Central Bank would act to lower Spanish and Italian borrowing costs. The optimism prompted the Bovespa to flirt with a three-month high, but it fizzled and indexes reversed course mid-session.
Petrobras drew down Brazil's Bovespa, capping its second straight daily gain to end down 0.62 percent to 58,917.73.
"The index has an important resistance at 60,000 points," said Henrique Kleine, chief analyst at Magliano brokerage in Sao Paulo. "If you see an announcement of stimulus, the index could find more room to rise, but otherwise it may fall back and fairly close to 50,000 points."
Market players are eyeing meetings in the next month of the Federal Reserve and European Central Bank that they hope will offer monetary stimulus to boost a sagging local economy and help control the euro zone debt crisis.
The chief executive of Petrobras, the Brazilian index's most heavily weighted stock, said it was not in talks with the government to raise fuel prices. The comments sent shares south, losing 1.58 percent on the day.
In June, the government allowed the company to impose modest price increases for the first time in eight years. Despite the rise in wholesale gasoline and diesel, a gap between local and international fuel prices remain, contributing to the company's losses.
Helping limit losses on the Bovespa, homebuilder Gafisa rose 5.38 percent, while rival PDG Realty added 1.08 percent.
"Gains in the homebuilding sector are an important yardstick for the entry of foreign capital," said Hamilton Alves, a senior analyst with BB Investimentos in Sao Paulo. "Today we are clearly seeing foreign investors returning to the stock market."
Net foreign fund flows into the Bovespa totaled 2 billion reais in the month through Aug. 17 as increasing risk appetite led investors to Brazil in search of higher returns. If the trend continues, August would be the first month with a net inflow of foreign funds since April.
Mexico's IPC index fell 0.63 percent, losing ground for a fourth straight session.
Mexican telecommunications giant America Movil weighed on the index, dropping 1.46 percent while conglomerate Alfa lost 2 percent. The company lost weight in the IPC after a routine rebalancing of shares in the index.
"This impact is affecting the IPC on the downside, this question of technical rebalancing," said Carlos Alonso, a trader at Interacciones in Mexico City.
Shares of cement maker Cemex climbed 1.68 percent after the company said it was near completing a massive refinancing deal that will help it get a handle on $7.2 billion in debt maturing in 2014.
In Chile, the benchmark IPSA stock index ended down 0.29 percent.
Latin America's key stock indexes at 2140 GMT:
MSCI Latam 3,653.92 -0.43 1.43
Brazil Bovespa 58,917.73 -0.62 3.81
Mexico IPC 40,096.64 -0.63 8.14
Chile IPSA 4,262.04 -0.29 2.02
Chile IGPA 20,578.35 -0.24 2.23
Argentina MerVal 2,441.23 -0.76 -0.87
Colombia IGBC 14,270.02 0.17 12.67
Peru IGRA 20,304.73 0.98 4.27
Venezuela IBC 291,761.00 0.32 149.29
(Reporting by Danielle Assalve, additional reporting by Gabriel Stargardter; editing by Gary Crosse)