* Mexico"s central bank unexpectedly holds rates steady * Weak oil prices pressure Mexican, Colombian pesos * Latam stocks tumble for second day * Peruvian sol falls to fresh 18-year low (Updates prices throughout, adds comments) By Shreyashi Sanyal Nov 12 (Reuters) - The Mexican peso pared back some declines on Thursday after the Bank of Mexico unexpectedly held interest rates steady in its latest meeting, while other Latin American currencies continued to fall by afternoon trading. The peso trimmed some losses after falling nearly 1% earlier in the session as Banxico, as the Bank of Mexico is known, kept its benchmark interest rate unchanged at 4.25% despite expectations of a 25-basis-point cut to 4.0%. "The communications accompanying the Mexican central bank"s decision to leave its policy rate unchanged at 4.25% today suggests that there may still be scope for one more cut in the easing cycle," said William Jackson, chief emerging markets economist at Capital Economics. "With the peso rallying and the economy weak, the argument for more policy support will remain strong." The currency is among the best performing Latin American units this year, having benefited recently from expectations of better trade ties with the United States after Joe Biden won the presidential election. Mexico"s currency and Colombia"s peso were also hurt by weakness in the oil market after the International Energy Agency raised doubts about a quick post-COVID-19 pickup in demand. Brazil"s real gave back most of its gains from earlier in the session even as data showed services activity rose more than expected in September, suggesting that certain facets of Latin America"s largest economy were picking up from the pandemic. Economy Minister Paulo Guedes said Brazil"s economy could grow as fast as 4% next year, accelerating its recovery from the depths of the pandemic as job creation and private sector investment continue to gather pace. While regional currencies and stocks benefited from optimism over coronavirus vaccine news on Monday, uncertainty over the vaccine"s availability, as well as continued signs of the pandemic"s economic impact prompted some unwinding in risk appetite. The MSCI"s index of regional stocks tumbled 3%, while its currencies counterpart fell 1%. Peru"s sol fell to another 18-year low as the country"s new Cabinet took shape on Wednesday after the ouster of centrist President Martín Vizcarra on Monday plunged the country into turmoil. Argentina"s central bank said it will raise its benchmark Leliq interest rate to 38% from the previous level of 36%, following a recent series of cuts. The bank will also raise the overnight reverse repo rate and the seven-day reverse repo rate. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1180.72 0.16 MSCI LatAm 2047.29 -3.11 Brazil Bovespa 102059.70 -2.62 Mexico IPC 40276.28 -1.43 Chile IPSA 3916.50 -1.58 Argentina MerVal 49648.11 -3.474 Colombia COLCAP 1202.34 -1.45 Currencies Latest Daily % change Brazil real 5.4772 0.01 Mexico peso 20.6497 -0.90 Chile peso 759.9 -0.83 Colombia peso 3634.27 -0.01 Peru sol 3.6397 -0.49 Argentina peso (interbank) 79.5600 -0.08 Argentina peso (parallel) 163 -0.61 (Reporting by Ambar Warrick and Shreyashi Sanyal in Bengaluru; Editing by Angus MacSwan)