(Rewrites throughout, updates prices, adds market strategist's quote) By Aaron Saldanha April 2 (Reuters) - Latin American stock markets fell on Tuesday as some investors locked in profits, putting an end to a three-session run which had seen a regional index gain more than 5 percent, while currencies in Latin America softened against a marginally firmer dollar.
The weakness came a day after strong regional gains were clocked on data showing activity at China's factories - key buyers of Latin American commodities - unexpectedly grew in for the first time in four months in March.
MSCI's index of Latin American stocks fell 0.9 percent on Tuesday, while its Latin American currencies index dipped 0.1 percent.
Brazilian stocks dropped 0.7 percent, falling for the first time in four sessions, as most sectors gave up ground.
"Risk premia across (Brazilian) assets remains relatively low compared to past episodes of stress, which make us reluctant to add risk at current levels," wrote Morgan Stanley strategists in a note.
Foreign investors have been keenly watching for the progress of a bill to reform Brazil's bloated pension system, which has been swept up in finger-pointing between politicians.
"In Brazil, the new administration has an ambitious reform agenda, but the implementation and timing remains unclear, raising uncertainties to the passage of necessary legislation in Congress," wrote Fitch Ratings in a special report.
Gol Linhas Aereas declined 1.3 percent after its chief executive said the airline will not cancel orders for Boeing Co's 737 MAX jet, a report said.
Limiting the Bovespa's losses, shares of Petroleo Brasileiro SA (Petrobras) recovered from weakness seen for most of the session as sources said it received three bids for gas pipeline network TAG, a day after investors reportedly dropped out of two bidding groups.
The state-run oil firm's common shares rose 0.4 percent, while its preferred shares ended up 1 percent to shake off weakness seen earlier in the day which came after sources said a Petrobras refinery's planned transfer to Chevron Corp had stalled.
Mexican stocks fell 0.8 percent while the peso dropped 0.4 percent, giving up a slice of Monday's 1.5 percent jump, which was its best one-day performance since last July.
The weakness came despite President Andres Manuel Lopez Obrador said Latin America's second largest economy would grow "at least" 2 percent this year, projecting a larger expansion than a government estimate issued just a day earlier.
Chile's peso fell 0.7 percent, tracking a drop in the price of top Chilean export copper,which fell on signs a blockade of a Peruvian mine may end.
Stocks in Chile fell 0.9 percent as weakness among materials and financials weighed.
Equities in the same sectors dropped in Argentina, where stocks ended 1.4 percent lower.
Key Latin American stock indexes and currencies at 2102 GMT: Stock indexes Latest Daily pct change MSCI Emerging Markets 1,071.14 0.1 MSCI LatAm 2,759.37 -0.85 Brazil Bovespa 95,386.76 -0.7 Mexico IPC 43,324.59 -0.8 Chile IPSA 5,208.55 -0.92 Argentina MerVal 33,006.82 -1.37 Colombia IGBC 13,019.35 -0.14 Currencies Latest Daily pct change Brazil real 3.8525 0.07 Mexico peso 19.2272 0.00 Chile peso 673.1 -0.21 Colombia peso 3,144.05 0.00 Peru sol 3.31 -0.09 Argentina peso (interbank) 42.7300 1.45 (Reporting by Aaron Saldanha in Bengaluru, Additional reporting by Jamie McGeever and Marcela Ayres in Brasilia)