* China's attempts to curb inflation raise export concerns
* Brazil's real dips 0.17 pct; Mexico peso flat
* Investors cautious over Brazil's incoming government (Adds Mexico commentary, updates prices)
By Samantha Pearson and Caroline Stauffer
SAO PAULO/MEXICO CITY, Nov 19 (Reuters) -The Brazilian real weakened slightly on Friday after China tightened its money supply to slow heady growth, threatening to crimp demand for Latin American exports.
China's central bank ordered lenders to lock up more of their money at the central bank for the second time in two weeks, leading to speculation a hike in interest rates was in the works. For more, see: [ID:nL3E6MJ0N8]
"If China raised its interest rates that would hurt commodity prices and directly affect emerging market currencies," said Mario Copca, an analyst at Vanguardia brokerage in Mexico City. "Restricting liquidity has a similar impact, but it is less pronounced."
China is Brazil's top trading partner and is a major source
of demand for the region's commodity exports. The Brazilian
real finished 0.17 percent weaker at 1.718 on the local spot
market
The Chilean peso
In Brazil, investors were also wary about news that Brazilian Finance Minister Guido Mantega will stay in his post in the next government, said Roberto Padovani, chief Brazil economist with WestLB bank in Sao Paulo. [ID:nN18268556]
"Mantega is a name associated with an expansionary fiscal policy and from a macroeconomic point of view, this is bad," he said.
Investors are looking for reassurances that when President-elect Dilma Rousseff takes office on New Year's day, she will work to cut public spending and keep a lid on inflation.
BUMPY RIDE FOR BRAZILIAN YIELDS
Fresh Brazilian inflation data, released by the Getulio Vargas Foundation research group on Friday, added to recent signs that prices are creeping up in Latin America's biggest economy. That gave traders a fresh reason to bet that the central bank would have to keep interest rates high to combat inflation.
Yields then spiked higher after a media report said that Central Bank President Henrique Meirelles recommended tighter monetary policy. That report proved to be incorrect, causing a rapid shift in positions and a frenzy of revised trading recommendations.
The yield on the contract due January 2012
Brazil's currency could be the subject of a price bubble, Meirelles said on Friday, adding that he would meet with Rousseff next week to discuss extending his term. [ID:nLDE6AI1GP] (Additional reporting by Jean Luis Arce; Editing by Dan Grebler)