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EMERGING MARKETS-Venezuela bonds tank; Mexico peso takes a breather

(Recasts with Venezuela bonds, update prices) March 31 (Reuters) - Venezuelan government bonds prices sank on Friday as tensions rose following the annulment of the country's legislature by the country's high court this week while the Mexican peso pulled back after a recent rally.

The price on Venezuela's benchmark $4 billion bond maturing in September 2027 with a 9.25 percent coupon bid down $3.42, driving its yield up by 1.5 percentage points to its highest since last August, at nearly 23 percent.

The move by the country's high court late Wednesday was met with international condemnation and street protests, and on Friday the fallout intensified when Venezuela's attorney general broke ranks with President Nicolas Maduro and rebuked the judiciary for its move.

Mexico's peso weakened about 0.5 percent after the nation's central bank slowed the pace of interest rate hikes, raising its benchmark rate by a quarter percentage-point to 6.50 percent, following four straight 50-basis-point hikes.

The move followed a 10 percent increase in the value of the peso so far this year, which helped ease inflationary pressures.

Bets that U.S. President Donald Trump will not impose big tariffs on Mexican exports to the United States lifted the currency from a slump last year - its steepest since 2008.

Lower iron ore prices dragged on demand for Brazilian assets, with shares of miner Vale SA falling more than 1 percent.

Losses were limited by rising shares of wood pulp and paper producers, such as Fibria Celulose SA and Klabin SA , on hopes that a rebound in pulp prices would continue in coming months.

Key Latin American stock indexes and currencies at 2200 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 958.37 -1.14 11.14 MSCI LatAm 2,611.10 -1.78 11.55 Brazil Bovespa 64,984.07 -0.43 7.90 Mexico IPC 48,541.56 -0.66 6.35 Chile IPSA 4,783.42 -0.74 15.22 Chile IGPA 23,967.87 -0.64 15.60 Argentina MerVal 20,265.32 0.08 19.79 Colombia IGBC 10,150.68 -0.38 0.22 Venezuela IBC 43,876.70 0.6 38.39 Currencies Latest Daily YTD pct pct change change Brazil real 3.1296 0.40 3.40 Mexico peso 18.8200 -0.48 10.22 Chile peso 660.2 0.42 1.59 Colombia peso 2,873.98 -0.03 4.44 Peru sol 3.248 -0.03 5.11 Argentina peso (interbank) 15.3800 0.20 3.22 Argentina peso (parallel) 15.93 -0.25 5.59 (Reporting by Michael O'Boyle and Bruno Federowski; Editing by Lisa Shumaker)