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EMERGING MARKETS-Brazil stocks edge lower as Petrobras weighs

* Brazil Bovespa loses 0.24 pct, Mexico IPC flat

SAO PAULO, Nov 1 (Reuters) - Brazil's Bovespa stock index

dropped for the third session in four on Friday, with shares of

oil producer Petrobras surrendering the previous session's gains

as investors took profits.

Mexico's IPC index was little changed, while Chile's

bourse was closed for a local holiday.

Brazil's benchmark Bovespa stock index lost 0.24

percent to 54,125.13, a level it has not closed below in three

weeks. Still, the index is on track to end the week nearly

unchanged from last Friday's close.

Shares of state-run oil company Petroleo Brasileiro SA

, known as Petrobras, fell 1.9 percent, contributing

most to the index's losses, after having rallied on Thursday by

2.4 percent.

Even with Friday's pullback, Petrobras shares are on track

to post a weekly gain of about 8.6 percent, their best weekly

performance in nearly eight months, after the company put

forward a new gasoline pricing model that could help boost its

bottom line.

"Petrobras is going through some very positive times...so

we're seeing a bit of profit-taking," said Ariovaldo Santos, a

trader with H.Commcor in Sao Paulo.

Friday also marked the Bovespa index's first session after

the removal of oil producer OGX Petroleo e Gas Participacoes SA

, which filed for bankruptcy protection on Wednesday.

"Many people anticipated OGX's exclusion from the index and

began rebalancing their portfolios, helping Petrobras shares

rise yesterday and the day before," Santos added.

Shares of steelmaker Gerdau SA rallied for a

third straight day, adding 3.2 percent and helping support the

index. Gerdau shares are up 9.5 percent this week, their best

weekly performance in two years, after the company reported

better than expected third-quarter earnings.

Mexico's IPC index was little changed from Thursday's

close, with a 1 percent rise in shares of mining firm Grupo

Mexico offsetting a 3 percent decline in lender

Grupo Financiero Inbursa.

Latin America's key stock indexes at 1351 GMT:

Stock indexes daily % YTD %

Latest change change

MSCI LatAm 3,420.09 -0.97 -9.07

Brazil Bovespa 54,125.13 -0.24 -11.20

Mexico IPC 41,007.06 -0.08 -6.17

Chile IPSA 3,912.44 1.06 -9.04

Chile IGPA 19,242.04 0.79 -8.68

Argentina MerVal 0.00 0 -100.00

Colombia IGBC 14,070.10 0.12 -4.39

Peru IGRA 16,322.01 0.07 -20.88

Venezuela IBC 2,609,685.15 0 453.56