(Corrects last bullet headline to Latam stocks flat, forex up 0.7% to reflect updated prices) * Argentina's bonds and stocks drop after presidential vote * Petrobras approves review of top management appointment policy * Mexican economy grows more than expected in August * Latam stocks flat, forex gains 0.7% By Johann M Cherian and Lisa Pauline Mattackal Oct 23 (Reuters) - Latin American currencies jumped against a softer U.S. dollar as benchmark U.S. Treasury yields pulled back from 16-year highs, while Argentinian markets plunged after Economy Minister Sergio Massa's strong performance in weekend elections took investors by surprise. MSCI's gauge of Latin American currencies was up 0.7%, set for its best session in two weeks. The index reversed a nearly 1% drop in earlier trade as the benchmark U.S. 10-year Treasury note yield pulled back after crossing 5%. . Argentina's sovereign dollar-denominated bonds tumbled after Sergio Massa unexpectedly emerged as the frontrunner in Sunday's election, setting the stage for a polarized run-off vote next month between Economy Minister and far-right radical Javier Milei. The peso opened steady at 350.10 to the dollar, as per traders, while the benchmark S&P Merval plunged 12%. "It will be a tight runoff vote between two dramatically divergent country visions," said Lucila Bonilla, EM Economist at Oxford Economics. "Massa, despite being considered more centrist than the incumbent government leaders, largely represents the continuity of (current) policies." Argentina's central bank is planning to hold fire for now on any major policy adjustments, sources told Reuters. The nation is battling triple-digit inflation and a looming recession, however the index is up over 259% so far this year, supported by cheap valuations and in anticipation of a political change. Later in the week, investors await key September U.S. personal consumption expenditure data that could determine the outlook for U.S. monetary policy and the dollar. Meanwhile, Brazilian stocks dipped 0.2%, bogged down by a nearly 7% loss in Petrobras shares after the oil giant's board approved a review of top management appointment policy and as oil prices dropped. Separately, the real was little changed after a central bank poll showed economists expect inflation in the region's largest economy to end 2023 at 4.65%. within the central bank's range. Mexico's peso rose 0.4% after economic activity exceeded expectations in August, while Colombia's peso and Peru's sol both rose 0.2%. Meanwhile, a poll showed traders expect the Chilean central bank to lower its benchmark interest rate by 75 basis points to 8.75% at its monetary policy meeting later in the week. The Andean country's currency rose 0.6%. MSCI's gauge of Latin American equities was set to end the day mostly flat. Key Latin American stock indexes and currencies at 1945 GMT: Latest Daily % change MSCI Emerging Markets 918.85 -0.73 MSCI LatAm 2176.38 -0.03 Brazil Bovespa 112886.81 -0.24 Mexico IPC 48239.80 -0.07 Chile IPSA 5503.33 -2.27 Argentina MerVal 701815.00 -12.361 Colombia COLCAP 1108.63 -0.79 Currencies Latest Daily % change Brazil real 5.0167 -0.02 Mexico peso 18.1549 0.38 Chile peso 934.2 0.58 Colombia peso 4225.5 0.19 Peru sol 3.8536 0.24 Argentina peso 349.9500 0.01 (interbank) Argentina peso 1050 -14.29 (parallel) (Reporting by Johann M Cherian and Lisa Mattackal in Bengaluru; Editing by Alistair Bell and Jonathan Oatis)