* Brazil lower house to vote on tax reform proposal Thursday * Demand boosts Brazil's service sector in June -PMI * Mexican peso strengthens, dips below 17 per dollar barrier (Updated at 1915 GMT) By Ankika Biswas and Shreyashi Sanyal July 5 (Reuters) - Most Latin American currencies held onto small gains on Wednesday even as the dollar gained following minutes from the U.S. Federal Reserve's last meeting, with the Mexican and Colombian pesos leading the advance on higher oil prices. Top crude oil exporter Colombia's peso maintained a 0.3% rise, hitting a two-week high, while the Mexican peso defended its highest level since December 2015, tracking higher prices of the commodity. Both the currencies are the best performers among their Latam peers so far this year, with the Mexican peso breaking below the 17-per-dollar barrier on Wednesday. Owing to the Mexican peso's multi-year bullish run, its surprising resilience to shocks, and current levels of the real effective exchange rate, analysts at Barclays foresee a case for authorities to "lean against the wind". Among others, Chile's peso was up 0.2%, while Argentina's peso rose 1.3% in black market trading. The dollar added 0.3% after minutes from the Fed's June policy meeting did little to alter expectations on the path of interest rate hikes. Minutes showed almost all Fed officials agreed to hold rates steady at the June meeting, the first pause after hikes at 10-straight prior meetings, but most believed more rate hikes would be needed. "Just as 'almost all' officials judged that it would be 'appropriate or acceptable' to leave rates unchanged at 5.00% to 5.25%, 'almost all' also 'judged that additional increases in the target federal funds rate during 2023 would be appropriate'," said Paul Ashworth, chief North America economist at Capital Economics. Brazil's real fell 0.2%, for the third straight session, weighing on the MSCI index for Latam currencies, down 0.4%. The government is working to get Congress to vote on a change to tax trial rules seen as crucial to balancing its budget, while lower house Speaker Arthur Lira expects the chamber to vote on a proposed tax reform on Thursday. Meanwhile, strong demand continued to support Brazil's services sector, data showed. The world's second largest copper producer Peru's sol slipped 0.5% tracking lower prices of the red metal after a private survey showed China's services activity expanded at the slowest pace in five months in June. The MSCI index for Latam stocks fell 0.2%, with Argentina's Merval index down 1.3%. Argentina's election race is narrowing, opinion polls showed before the Aug. 13 primary vote, with the ruling Peronist coalition's choice of a centrist candidate defusing some of the threat from far-right libertarian Javier Milei. Latin American stock indexes and currencies at 1915 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 999.97 -0.8 MSCI LatAm 2466.12 -0.17 Brazil Bovespa 119720.5 0.54 1 Mexico IPC 53948.15 0.03 Chile IPSA 5853.28 -0.7 Argentina MerVal 436068.0 -1.223 1 Colombia COLCAP 1127.73 -0.58 Currencies Latest Daily % change Brazil real 4.8456 -0.13 Mexico peso 17.0228 0.22 Chile peso 796.7 0.21 Colombia peso 4127.5 0.28 Peru sol 3.6291 -0.39 Argentina peso (interbank) 259.5500 -0.08 Argentina peso (parallel) 487 1.23 (Reporting by Ankika Biswas and Shreyashi Sanyal in Bengaluru, Editing by Nick Zieminski and Grant McCool)
