* Rate hikes to hamper recovery -Brazil Economy Minister * Brazil"s real top Latam weekly performer * Cosmetics maker Natura slumps on weak results By Shashank Nayar Nov 12 (Reuters) - Brazil"s real fell on Friday after the Economy Minister warned that rising interest rates would hamper economic recovery, while the Mexican and Peruvian currencies firmed after hikes by their respective central banks. Falling oil and copper prices weighed on the Colombian and Chilean pesos. The real dropped 0.3%, after the comments by Brazilian Economy Minister Paulo Guedes. The country"s policy rate has been hiked by a total of 575 basis points this year to combat inflation, with more slated. With elections due next year, investors have also been wary of populist policies from President Jair Bolsonaro who will likely be up against former president Luiz Inácio Lula da Silva. And while the passage by Brazil"s Lower House of an amendment for larger fiscal spending removed some uncertainty in the market, the Senate is yet to pass it. The real was on track for weekly gains of 2%, the most among its Latin American peers, despite Friday"s fall on data showing services activity in Brazil grew less than expected. Brazil"s benchmark stock index slipped 0.2% with cosmetics maker Natura & Co sliding almost 13% after it reported a 28.5% 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 4% 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. Central banks in Brazil, Peru and Mexico have raised benchmark interest rates many times this year to combat inflation. Mexico"s peso gained around 0.3% after its central bank hiked rates by 25 basis points on Thursday, as expected. Peru"s sol rose 0.1% after its central bank hiked rates by 50 bps to 2% after market hours on Thursday. Key Latin American stock indexes and currencies at 1442 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1285.26 0.3 MSCI LatAm 2192.39 -1.28 Brazil Bovespa 106636.25 -0.89 Mexico IPC - - Chile IPSA 4515.89 -0.08 Argentina MerVal 96477.70 0.556 Colombia COLCAP 1365.41 -0.03 Currencies Latest Daily % change Brazil real 5.4285 -0.48 Mexico peso 20.6094 0.11 Chile peso 797.1 -0.50 Colombia peso 3885.78 -0.24 Peru sol 4.0186 -0.31 Argentina peso 100.2100 0.00 (interbank) (Reporting by Shashank Nayar and Susan Mathew in Bengaluru; Editing by Alexander Smith)