(Recasts; updates prices, adds market strategist's quote) By Aaron Saldanha Feb 13 (Reuters) - Most Latin American stocks dropped on Wednesday, as shares in heavyweight Brazil ran out of steam and Mexican stocks tumbled, while Latin American currencies softened against a stronger U.S. dollar.
Equities in Latin America gave up much of Tuesday's surge, which was fueled by expectations of a U.S.-China trade deal. Regional currencies failed to hold ground against the greenback, which strengthened after U.S. inflation data was released.
Concerns that pension reform may not pass as quickly as expected hurt Brazilian shares while a slide in Mexican telecommunications firm America Movil pulled stocks in Latin America's second-largest economy lower.
Igor Lima, a partner at Galt Capital in Brazil, said a more definitive articulation of Brazil pension reform was needed to sustain a rally in local stocks.
MSCI's index of Latin American stocks fell 1.1 percent, while its index of Latin American currencies declined 0.4 percent.
Benchmark stocks in Brazil fell 0.3 percent, as losses among financials and consumer staples outweighed gains in resources firms including Vale SA and Petroleo Brasileiro SA.
Brazil's real slid about 1.2 percent to almost entirely reverse Tuesday's gains, while Mexico's peso weakened 0.9 percent.
Mexican stocks posted their biggest decline in nearly two months as investors dialed back on exposure to America Movil.
Shares in the firm, whose top shareholders are billionaire Carlos Slim's family, slid 5.1 percent to a 2019 low a day after it reported flat fourth-quarter revenue.
Argentina's stocks benchmark fell 1.7 percent on selling pressure from traders booking profits after Tuesday's record closing peak, while the country's peso softened.
Chile's peso fell half a percent, while local stocks were little changed.
Bonds of Ecuador, which has a heavy external debt load, traded sharply higher a day after the International Monetary Fund confirmed it was engaged in formal talks with the government over a possible IMF-backed financial arrangement.
Key Latin American stock indexes and currencies at 2136 GMT Stock indexes Latest Daily pct change MSCI Emerging Markets 1041.84 -0.03 MSCI LatAm 2824.39 -1.14 Brazil Bovespa 95842.40 -0.34 Mexico IPC 42284.06 -1.92 Chile IPSA 5386.61 0.03 Argentina MerVal 37038.92 -1.72 Colombia IGBC 11962.22 0.07 Currencies Latest Daily pct change Brazil real 3.7555 -0.14 Mexico peso 19.4260 -0.90 Chile peso 663.05 -0.49 Colombia peso 3135.86 -0.36 Peru sol 3.338 -0.27 Argentina peso (interbank) 38.1800 -0.50 (Reporting by Aaron Saldanha in Bengaluru and Paula Arend Laier in Sao Paulo; Editing by Meredith Mazzilli)