* MSCI rescinds Argentina"s emerging market status * Mexican peso set for best week in over a year * Latam FX to add nearly 3% this week By Ambar Warrick June 25 (Reuters) - Mexico"s peso extended gains on Friday after a surprise interest rate hike, while Latin American currencies were set to outpace their emerging market peers this week on a slew of hawkish central bank signals. The peso rose 0.5% after surging 1.6% on Thursday- its best day in 2021 so far. The currency was also set for its best week in more than a year, with a 4.5% jump. The Mexican central unexpectedly hiked rates to 4.25%, citing a recent rise in local inflation, as well as possible price spillovers from the United States. "This suggests to us that year-on-year core inflation, and core inflation momentum, will need to show evidence of easing, and that Banxico will continue to tighten policy (at a minimum) until that is achieved," Sacha Tihanyi, head of emerging markets strategy at TD Securities, wrote in a note. Argentine markets remained in focus after MSCI said it would reclassify its Argentina index to Standalone Markets status, from Emerging Markets, citing issues over strict capital controls. JPMorgan predicted $610 million of capital outflows from Argentina, due to the reclassification. But the peso showed little reaction due to the capital controls. Brazil"s real, which was flat on Friday, was set to add 3.5% this week after minutes of the central bank"s last meeting showed a 100 basis point hike was on the cards. The real has benefited greatly from a hawkish central bank, and recently hit a one-year high. It is also among the best performing emerging market currencies this year. Data on Friday showed Brazilian consumer inflation surged in the first half of June, while a separate reading showed the country"s current account deficit at its smallest in more than 13 years. Chile"s peso rose 0.8%, and was set to add 2.6% this week after the minutes of the Chilean central bank"s last meeting showed it was considering an interest rate hike. The hawkish signals put MSCI"s index of Latam currencies on course for a weekly gain of nearly 3%, outpacing a 0.3% rise in the index of broader EM currencies . The Latam index has performed far better than its EM peer this year, adding more than 4%, compared to a 1.4% gain. Latin American stocks have marked a similar milestone, after largely lagging their peers through 2020. Sentiment towards emerging markets was bolstered on Friday after U.S. consumer spending data - a key gauge of inflation for the Fed - remained unchanged in May, furthering the Fed"s stance that inflation was likely to be transient. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1381.11 1 MSCI LatAm 2704.38 0.65 Brazil Bovespa 129472.86 -0.03 Mexico IPC 50459.43 -0.2 Chile IPSA 4436.76 0.35 Argentina MerVal - - Colombia COLCAP 1277.75 -0.08 Currencies Latest Daily % change Brazil real 4.9050 -0.01 Mexico peso 19.7571 0.47 Chile peso 727.83 0.77 Colombia peso 3743.05 0.54 Peru sol 3.9838 0.00 Argentina peso 95.5800 -0.02 (interbank) (Reporting by Ambar Warrick; Editing by Angus MacSwan) Our Standards: The Thomson Reuters Trust Principles.