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Updated at 1425 GMT

By Johann M Cherian

Sept 9 (Reuters) - Mexican equities were among top performers in Latin American equities on Monday, after signs of moderating price pressures raised hopes for interest rate cuts, while most regional currencies dipped against a firmer U.S. dollar.

Mexico's main equities index .MXX rose 0.9% after data showed headline inflation in the region's second-largest economy eased to 4.99% in August, boosting expectations that Banxico will lower borrowing costs when it meets later this month.

The oil exporter's peso MXN= appreciated 0.7% tracking higher crude prices, and rebounded from losses logged in the previous three weeks. Still, the currency was far from a more than one-year low.

"We expect the downtrend to continue at the headline level in coming months, but politics are a key threat," said Andrés Abadía, chief Latam economist at Pantheon Macroeconomics.

A highly contested proposal on judicial reform that critics say will hurt Mexico's business climate edged closer to approval when senators late on Sunday backed it at the commission stage.

"Approval of the (constitutional) reforms could complicate the United States-Mexico-Canada treaty's six-year joint review in 2026," Abadía added.

Meanwhile, Brazil's real BRL= slipped 0.2% ahead of an inflation report due later in the week. Uncertainty regarding the local central bank's monetary policy path prevailed after data last week hinted at stronger-than-expected economic performance.

Soothing some worries about fiscal instability, sources said the government is considering tax hikes that do require congressional approval to balance this year's budget.

Colombia's peso COP= dipped 0.3% as hopes for an upcoming interest rate cut were boosted by data that showed consumer prices rose 6.12% in August, less than expectations of a 6.35% rise.

Currencies of copper producers Chile CLP= and Peru PEN= were little changed.

MSCI's index tracking Latin American currencies .MILA00000CUS weakened 0.08% against a firmer greenback, as investors scaled back expectations for an outsized 50-basis-point rate cut by the Federal Reserve ahead of a U.S. inflation report later in the week.

On the equities front an index .MILA00000PUS tracking regional bourses added 0.6%, with Brazil's Bovespa .BVSP rising 0.4% aided by a rise in energy stocks.

Argentina's MerVal index .MERV climbed 1.3%, with YPF YPFDm.BA edging up 0.4% after the U.S. government said it may get involved in a dispute over whether Argentina should give up its 51% stake in the oil and gas company to help satisfy a $16.1 billion court judgment.

Key Latin American stock indexes and currencies:

(Reporting by Johann M Cherian in Bengaluru)

((johann.mcherian@thomsonreuters.com;))