Nov 6 (Reuters) - Latin American stocks were set to fall for a first session in six on Tuesday, plagued by caution as traders watched the progress of the U.S. midterm congressional election for cues on the direction of trade.
The elections could shape the future of U.S. President Donald Trump's regime and test his tax and trade policies, with polls expecting the Democratic Party to gain control of the U.S. House of Representatives, a scenario which caps market bullishness.
Gabriel Casillas, chief economist and head of research at Banorte Research wrote that investors were staying bearish, with their attention focused on the electoral results.
MSCI's index of Latin American equities was 1.3 percent lower, hurt by a half a percent fall in Brazil amid broad-based weakness.
The top loser on the country's Bovespa stock index was Magazine Luiza SA, down 7.4 percent after third quarter net income rose less than some investors expected.
Petroleo Brasileiro SA traded 1 percent lower. A surge in spending dimmed optimism over a multifold rise in quarterly net profit which fell short of analysts' estimates.
In foreign exchange markets, MSCI's index of Latin American currencies was down 0.4 percent, on track to weaken for a first session in four.
Brazil's real weakened 0.7 percent with traders feeling President-elect Jair Bolsonaro's plans for pension reform would not be as rapid and radical as markets initially expected.
"The age limits he proposed may lead the market to think that his version of reform will be softer than (current President Michel) Temer's and temper some enthusiasm in the BRL after a strong rally," wrote Dirk Willer, managing director and head of emerging market strategy at Citigroup, in a note.
Mexico's peso was rangebound as data showed gross fixed investment fell 3.4 percent in August, on a month-on-month basis.
In Argentina, the peso marked time while stocks rose in thin trade seen account of Argentine banks being closed for a holiday.
Bucking the trend, Colombia's peso firmed to a one and a half week high.