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Updated at 1927 GMT/3:27 pm ET

By Shashwat Chauhan and Lisa Pauline Mattackal

Aug 27 (Reuters) - The Mexican peso weakened 2% on Tuesday as lawmakers pushed forward with a controversial judicial reform plan, while other Latin American currencies were also weaker amid declines in commodity prices and worries about escalating geopolitical tensions.

Mexico's currency MXN= depreciated 1.7%, hitting a more than three-week low of 19.726 per dollar, after lawmakers approved in a committee vote a controversial judicial reform late on Monday, paving the way for a final debate when the elected Congress begins its term month.

The proposed reform, proposed in February by outgoing President Andres Manuel Lopez Obrador, calls for the popular election of over 7,000 judges and magistrates, including Supreme Court justices and has been a source of concerns for investors.

Meanwhile, Brazil's real BRL= edged 0.1% lower after data showed consumer price inflation slowed this month, adding to uncertainty about the central bank's interest rate decision month after it recently adopted a more hawkish and data-dependent policy stance.

"The continuation of above-trend real activity amidst robust job creation and wage growth is moving the policy toward rate hikes, despite a more favorable external monetary policy backdrop," economists at Goldman Sachs wrote in a .

MSCI's indexes for Latin American currencies .MILA00000CUS fell 0.6%, while a gauge of regional stocks .MILA00000PUS lost 0.9% each.

Colombia's peso COP= slipped 0.3% as prices of crude oil, one of the country's top exports, fell more than 2% after spiking on Monday, while Chile's peso CLP= lost 0.2%. O/R

Shares of oil companies fell, with Brazil's Petrobras PETR4.SA down 1.3%, and Colombia's Ecopetrol ECO.CN losing 0.7%.

Most Latin American currencies saw sharp gains at the end of last week when Federal Reserve Chair Jerome Powell said on Friday "the time has come" to lower interest rates, pushing the dollar to its lowest level so far this year.

However, typically risk-on emerging market assets have paused for breath so far this week, as investors measured the risks of escalating geopolitical worries in the Middle East and looked ahead to key economic data in the U.S. for more clues on the interest rate trajectory.

Hezbollah had launched hundreds of rockets and drones at Israel early on Sunday, and Israel's military said it struck Lebanon with around 100 jets to thwart a larger attack.

Shares of Vale VALE3.SA gained 3.5% after the miner said that current Chief Financial Officer Gustavo Pimenta will become its Chief Executive Officer.

Brazil's Bovespa stock index .BVSP edged up 0.1%, while Mexican stocks .MXX fell 0.7% to an over two-week low.

HIGHLIGHTS

** Pakistan eyes $4 bln from Middle East banks to plug financing gap, says central bank chief as per a Reuters report

** Mexico central bank has growing inflation challenge: extortion

** GRAPHIC-Foreign investors ditch India's pricey stocks, opt for issues

Key Latin American stock indexes and currencies:

(Reporting by Shashwat Chauhan and Lisa Mattackal in Bengaluru; editing by Jonathan Oatis and Marguerita Choy)

((Shashwat.Chauhan@thomsonreuters.com;))