RIO DE JANEIRO, April 17 (Reuters) - The Brazilian real weakened more than half a percentage point on Thursday as investors turned cautious ahead of a long holiday weekend, while the Chilean peso edged lower ahead of a key central bank decision on interest rates.
Trading volumes were thin as many traders took off for the Easter holiday; the Mexican bourse was closed on Thursday.
Brazilian financial markets will be shut on Friday and will not reopen until on Tuesday, because the country celebrates a local holiday right after Easter this year.
"The FX market will be closed for four days, so a few players are building (dollar) positions for protection," said Jaime Ferreira, a currency desk manager at Intercam, a brokerage in Sao Paulo.
The real dropped 0.6 percent to 2.2530 per dollar, its weakest level in more than 10 days.
Chile's peso slid 0.15 percent as some investors sought protection against the off chance of another interest rate cut by the central bank later in the day.
The Chilean central bank is widely seen holding rates steady at 4.0 percent on Thursday, halting a monetary easing cycle that has shaved 100 basis points off the country's base interest rate since October.
Latin American shares were little changed, with MSCI's benchmark stock index for the region 0.3 percent lower.
Brazil's Bovespa index gained 0.3 percent, recovering from early losses. The index was prone to swings before Tuesday's expiration of stock options, traders said.
Shares of Brazilian homebuilders such as Rossi Residencial , MRV Engenharia, and PDG Realty all fell more than 2 percent after Deutsche Bank cut its recommendation on the stocks, saying the outlook for the real state sector is expected to worsen in the next few months.
Key Latin American stock indexes and currencies at 1655 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1007.56 0.5 -0.02 MSCI LatAm 3241.36 -0.16 1.43 Brazil Bovespa 51424.33 0.44 -0.16 Mexico IPC Holiday n/a -4.30 Chile IPSA 3896.08 -0.41 5.32 Chile IGPA 19102.99 -0.33 4.81 Currencies daily % YTD % change change Latest Brazil real 2.2530 -0.58 4.61 Mexico peso 13.0625 0.01 -0.25 Chile peso 557.1 -0.16 -5.56 (Reporting by Walter Brandimarte, Priscila Jordao and Bruno Federowski; Editing by Leslie Adler)