* Rate hikes to hamper recovery -Brazil Economy Minister * Brazil"s real top Latam weekly performer * Cosmetics maker Natura slumps on weak results (Updates prices and market details) By Shashank Nayar and Ambar Warrick Nov 12 (Reuters) - Brazil"s real slipped from a more-than one-month high on Friday after the Economy Minister said that rising interest rates would hamper economic recovery, while Mexico"s peso rose on the central bank hiking interest rates. The real slumped 1% after the comments from the minister, Paulo Guedes. Brazil"s policy rate has been hiked by a total of 575 basis points this year to combat inflation, with more hikes slated. Data also showed Brazilian service sector activity slowed in September. With elections due next year, investors have been wary of populist policies from President Jair Bolsonaro, who could be up against former president Luiz Inacio Lula da Silva. Uncertainty over the Senate"s passage of an amendment for larger fiscal spending has also weighed on sentiment. Still, a jump in iron ore prices put the real on track for weekly gains of more than 1%. Chile"s peso was also set for similar gains, tracking strength in copper prices amid some relief over China"s property market, which is a major driver of metal demand. Brazil"s benchmark stock index slipped 1.2% with cosmetics maker Natura & Co sliding 16% after it reported a drop in quarterly net income. It also announced a new share buyback program and potential plans to list its shares in New York. Planemaker Embraer SA dropped 7% after the Brazilian government unilaterally cut by 25% the value of KC-390 military cargo aircraft contracts. "Political uncertainty, coupled with increased government spending and a 10% rise in YoY inflation, have caused much strife for Brazilian equities over the past two months," Thornburg Investment Management said in a note. "We have significantly trimmed our exposure to companies in the country, going from about 8% during the summer to about 3%." Most other currencies in the region were set to fall or make mild gains for the week after the U.S. dollar edged higher as surprisingly strong U.S. inflation prompted investors to advance their bets on a U.S. rate hike to as early as mid-2022. Falling oil and copper prices weighed on the Colombian and Chilean pesos. Central banks in Peru and Mexico raised interest rates this week to combat higher inflation. Mexico"s peso gained around 0.5% after its central bank hiked rates by 25 basis points on Thursday, as expected. Peru"s sol fell 0.1% after its central bank hiked rates by 50 bps to 2% after market hours on Thursday. Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1285.09 0.29 MSCI LatAm 2188.30 -1.46 Brazil Bovespa 106311.66 -1.19 Mexico IPC 51456.45 -0.48 Chile IPSA 4502.28 -0.38 Argentina MerVal 94398.84 -1.61 Colombia COLCAP 1356.95 -0.65 Currencies Latest Daily % change Brazil real 5.4592 -1.04 Mexico peso 20.5286 0.51 Chile peso 799.95 -0.85 Colombia peso 3880.33 -0.10 Peru sol 4.0092 -0.08 Argentina peso 100.2000 0.01 (interbank) (Reporting by Shashank Nayar and Susan Mathew in Bengaluru; Editing by Alexander Smith and Grant McCool)