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EMERGING MARKETS-Mexican stocks hit 3-week low on Fed jitters

* Brazil's Bovespa sheds 0.38 pct; Mexico's IPC down 0.7 pct

MEXICO CITY, Dec 17 (Reuters) - Mexican stocks sank to a more than three week low on Tuesday, leading Latin American bourses down as investors fretted about the U.S. Federal Reserve's coming announcement on its massive stimulus program.

Investors have avoided taking big positions in local shares until after the Fed concludes its two-day policy meeting on Wednesday, the last of this year, and issues a decision on its $85 billion a month bond buying program, analysts said.

The program has helped support global demand for riskier assets such as Latin American equities, but the Fed has said repeatedly that it will reduce the program's scale once it is confident the U.S. economic recovery is sustainable. The question for investors has been when the Fed will decide the time is right.

Market participants generally expect no major policy changes, although the U.S. central bank could begin to lay the groundwork for a reduction in its economic stimulus that many believe could occur in the first quarter of the new year.

Mexico's IPC index shed 0.7 percent to close at 41,758.55 points, dipping for the third session in four and reaching its lowest close since Nov. 26.

Carlos Slim's telecommunications company America Movil led the bourse down after the government said Mexico's telecom watchdog opened a probe into a complaint of excess concentration of power in the telephone and television markets.

Shares of the company, which controls about 70 percent of the Mexican mobile phone market and some 80 percent of the fixed line business, fell 1.65 percent.

Brazil's Bovespa stock index shed 0.38 percent to 50,090.35 points after swinging widely earlier in the session.

The shares of state-run oil company Petroleo Brasileiro SA , known as Petrobras, fell for the first session in four, losing 3.11 percent and dragging down the index.

"Some analysts are saying there is a risk of the company defaulting in coming years," said Leandro Silvestrini, a broker with Intrader in Sao Paulo.

In October, Moody's Investors Service downgraded Petrobras' debt rating on concern fuel subsidies and huge investment commitments will cause its debt to grow until at least 2015.

Silvestrini said gains in Petrobras shares tend to be short-lived due to investor wariness about government interference in the company, particularly on fuel price policy, which has led to big losses in its refining division.