(Updates prices, adds Mexico stock details) By Bruno Federowski SAO PAULO, Dec 6 (Reuters) - Mexico's S&P/BVM IPC share index dropped 1.03 percent on Wednesday as the market readjusted following news that bank Banorte would acquire a smaller rival, creating the country's second-biggest bank.
Banorte weighed on the index as its shares fell 2.72 after Tuesday's spike in response to shareholder approval of the acquisition of Grupo Financiero Interacciones .
The global MSCI Emerging Markets Index on Wednesday hit its lowest level since October after declining for more than a week.
Stocks worldwide paused amid the uncertainty of forthcoming U.S. tax legislation and a potential U.S. government shutdown looms if Congress fails to agree on a spending package.
The Mexican peso fell 0.48 percent after data showed strong job creation in the U.S. manufacturing sector, which drove some expectations of faster-than-expected interest rate hikes by the Federal Reserve in coming months that could drain funds away from emerging markets.
The figures came ahead of the U.S. Labor Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment.
Brazilian markets seesawed on Wednesday as the government rushed to gather lawmaker support for a plan to streamline the social security system and curb government debt.
"The market sees the government's efforts to put the pension reform to vote this year as positive, but nothing's set in stone so there's reason to be wary," said Felipe Pellegrini, a manager at Banco Confidence.
The Brazilian real slipped 0.15 percent, while the Bovespa stock index rose 1 percent.
Shares in wood pulpmaker Fibria SA jumped 6.47 percent after the company forecast a 60 percent increase in investments next year.
Electricity companies were two of the biggest decliners on the Bovespa, as traders feared the privatization of the state-owned power utility could take longer than expected.
Shares in EDP Energias do Brasil SA fell 2.08 percent while shares in Transmissora Alianca de Energia Eletrica SA dropped 1.51 percent.
Latin American stock indexes and currencies at 2223 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1101.19 -1.48 27.71 MSCI LatAm 2739.98 -0.12 17.06 Brazil Bovespa 73268.35 1 21.65 Mexico IPC 46973.30 -1.03 2.91 Chile IPSA 4888.13 -0.75 17.75 Chile IGPA 24613.77 -0.78 18.71 Argentina MerVal 26470.45 -0.05 56.46 Colombia IGBC 10843.42 0.04 7.06 Venezuela IBC 1354.40 0.63 -95.73 Currencies daily % YTD % change change Latest Brazil real 3.2346 -0.15 0.45 Mexico peso 18.8575 -0.48 10.00 Chile peso 653.35 0.05 2.66 Colombia peso 3005.99 -0.46 -0.17 Peru sol 3.234 0.09 5.57 Argentina peso (interbank) 17.2525 0.25 -7.98 Argentina peso (parallel) 17.9 0.34 -6.03 (Reporting by Bruno Federowski and Daina Beth Solomon; Editing by Meredith Mazzilli)