By Susan Mathew Oct 1 (Reuters) - The Argentine peso climbed more than 4 percent on Monday on the back of a debt sale by the central bank aimed at mopping up excess liquidity and signs that the International Monetary Fund (IMF) is solidly behind the inflation-racked country, while the Mexican peso gave up all its trade deal-driven gains.
The Argentine peso rose 4.6 percent to close at 39.4 per dollar, more than making up for a 3.87 percent loss against the greenback on Friday, when Argentina struck a deal with the IMF to bolster its finances.
The bank sold about 71.1 billion pesos ($1.78 billion) worth of seven-day "Leliq" notes, above market expectations of 60 billion pesos.
"Market participants have been surprised by the level of support that the IMF has for Argentina. This has led investors to feel more comfortable with Argentine risk," Daniel Osorio, president of New York-based consultancy Andean Capital Advisors, said in a telephone interview.
Nonetheless, the MerVal stock index fell for a fourth straight session. The losses were led by energy companies, with Argentina-listed shares of Petrobras down 4.4 percent, and YPF SA sliding 5.1 percent even as crude oil prices rose.
Meanwhile, the Mexican peso closed little changed, erasing most of its gains from the start of the session after a U.S.-Canada trade deal over the weekend salvaged the trinational North America Free Trade Agreement (NAFTA) without fracturing any of the key supply chains involved.
While there is no denying that this is a positive development, economists at Rabobank said in a note to clients explaining the peso's move that the market was not pricing in a break-up and left their three-month forecast for the currency unchanged.
Mexican stocks held on to earlier gains, with the benchmark IPC index hitting a one-month high, as auto parts makers got a lift from the trade deal.
Nemak soared 7.4 percent, while Rassini added 3.4 percent as they may benefit from increasing regional content requirements for automaking in North America from the trade deal.
Brazil's real strengthened on the first day of what analysts expect will be a volatile week during the run-up to the first round of the country's presidential election this weekend.
However, a near 30-percent plunge in healthcare insurer Qualicorp dragged the country's benchmark Bovespa stock index down more than 1 percent.
Qualicorp shares tumbled after it said it would pay its founder and biggest shareholder 150 million reais ($37.22 million) in return for a pledge not to sell his shares or compete with it.
Key Latin American stock indexes and currencies at 2011 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 1,046.01 -0.18 -9.54 MSCI LatAm 2,564.00 -0.49 -8.9 Brazil Bovespa 78,623.66 -0.91 2.91 Mexico IPC 49,873.01 0.75 1.05 Chile IPSA 5,298.38 0.28 0.28 Argentina MerVal 32,673.63 -2.36 8.67 Colombia IGBC 12,556.99 0.75 10.43 Currencies Latest Daily YTD pct pct change change Brazil real 4.0231 -0.14 -17.64 Mexico peso 18.7163 -0.04 5.25 Chile peso 658 -0.06 -6.59 Colombia peso 2,999.05 -1.31 -0.57 Peru sol 3.307 -0.09 -2.12 Argentina peso (interbank) 39.4000 4.82 -52.79 Argentina peso (parallel) 38.25 3.92 -49.73 (Reporting by Susan Mathew in Bengaluru, additional reporting by Hugh Bronstein, editing by G Crosse)