EMERGING MARKETS-Most Latam currencies slip; rate hike prospects buoy Brazil's real

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By Susan Mathew

Nov 25 (Reuters) - Latin American currencies lagged emerging market peers on Thursday, with Mexico's peso hit by shrinking economic growth, while in Brazil, inflation near 20-year highs kept the currency from losses on speculation of large interest rate hikes.

After a 1% slide on Wednesday on central bank leadership uncertainty, Mexico's peso MXN= extended losses to a sixth straight session, down 0.5% to stay near eight-month lows.

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Seasonally adjusted data on Thursday showed Mexico's economy shrank 0.4% in the third quarter from the previous three month period, with a sharp contraction in service sector activity driving the decline. A Reuters poll had forecast a 0.3% contraction.

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This comes a day after figures showed annual inflation rose faster than expected to 7%, its highest in over a decade, adding pressure on the central bank to tighten policy more.

Volumes were expected to be low, with U.S. Treasury and stocks markets shut for Thanksgiving.

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Brazil's real BRBY was flat, faring better than regional peers as expectations of a large rate hike next month increased after consumer prices rose slightly more than expected. Month-on-month, however, prices fell.

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