* Brazilian stocks at 11-month low, real down 4.5% this week * Russian rouble jumps to 16-month high on rate hike * Mexico"s peso leads early gains By Ambar Warrick Oct 22 (Reuters) - Brazil"s real hit a six-month low on Friday amid growing concern over government plans to breach its spending cap, while Mexico"s peso rose as a high inflation reading spurred more bets on interest rate hikes. The real fell as much as 1.1% to a more-than six-month low of 5.7183 to the dollar after four senior Treasury officials resigned on Thursday, amid signals from the economy minister and president that the government will breach its fiscal ceiling to boost welfare spending. The real was also the worst performing emerging market (EM) currency this week, set for a loss of 4.5% as investors fretted over the long-term impact of higher spending, which was already under pressure from the COVID-19 pandemic. "The move highlights the government’s failure to find a permanent solution to optimizing government spending to create room for additional social spending," analysts at TS Lombard wrote in a note. "But if the rising fiscal risks indeed materialize, the bank will likely tighten policy more aggressively to keep longer-term inflation expectations anchored, adding further downside risks for 2022 GDP growth." Brazilian stocks dropped 2% and were trading near 11-month lows, while benchmark 10-year bonds sank to three-year lows. Most other Latin American currencies were muted. Mexico"s peso was the best performer for the day, rising 0.8% as data showed consumer prices rose more than expected in the first half of October. The reading saw investors pricing in more hawkish actions by the central bank, which has already hiked rates several times this year. But even with most EM central banks raising interest rates, investors were seen turning somewhat lukewarm on the space through October, according to a client survey by JP Morgan. The bank saw EM rates positioning drop to its lowest level in three years, while EM retail bonds suffered from their largest four-week outflow since March 2020. Concern over rising inflation and a global energy crunch has dented appetite for EMs since September, with fears of a Chinese debt crisis also hurting sentiment. Elsewhere, Russia"s rouble jumped 0.8% to a 16-month high against the dollar after the central bank lifted interest rates by a bigger-than-expected 75 basis points to 7.5%. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1295.58 0.2 MSCI LatAm 2139.53 -1.35 Brazil Bovespa 105558.10 -2.02 Mexico IPC 52130.91 0.21 Chile IPSA 4089.82 0.9 Argentina MerVal 0.00 0 Colombia COLCAP 1408.36 -0.13 Currencies Latest Daily % change Brazil real 5.6893 -0.39 Mexico peso 20.1401 0.76 Chile peso 816.5 0.14 Colombia peso 3776.93 0.04 Peru sol 3.963 -0.55 Argentina peso 99.3900 -0.01 (interbank) (Reporting by Ambar Warrick; editing by Philippa Fletcher) Our Standards: The Thomson Reuters Trust Principles.