RIO DE JANEIRO, May 18 (Reuters) - Brazil's benchmark Bovespa index dropped more than 1 percent on Monday as shares of banks and miners weighed, while Latin American currencies weakened as higher U.S. Treasuries yields lured investors out of riskier assets.

Shares of Brazilian banks Bradesco slid 3.2 percent while Itau Unibanco dropped 2.1 percent on concerns the government may increase taxes on the banking sector to help it plug a growing fiscal deficit.

Shares of miner Vale, the world's largest producer of iron ore, fell nearly 3 percent as prices for the mineral declined for a fourth straight session.

The Bovespa stock index dropped 1.5 percent, erasing early gains that had been supported by Petrobras.

Preferred shares of Petrobras, the state-run oil company, rose as much as 4.2 percent after it reported first-quarter earning that beat analysts' estimates, but later erased gains.

Meanwhile, key Latin American currencies slid between 0.2 percent and 0.7 percent as a rise in U.S. Treasuries yields sapped investor appetite for higher-yielding but riskier emerging market assets.

Many investors avoided large positions in Latin American currencies before the U.S. Federal Reserve releases minutes from its latest monetary policy meeting on Wednesday. The document is expected to shed light on how long U.S. policymakers may take to raise interest rates in the world's largest economy.

Key Latin American stock indexes and currencies at 1550 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 1040.45 -0.28 9.11 MSCI LatAm 2717.51 -1.75 1.4 Brazil Bovespa 56410.91 -1.46 12.81 Mexico IPC 45243.96 -0.2 4.86 Chile IPSA 4100.17 -0.28 6.47 Chile IGPA 19885.09 -0.26 5.38 Argentina MerVal 12265.029 -0.89 42.97 Colombia IGBC 10571.67 -0.24 -9.14 Venezuela IBC 5699.58 0.07 47.71 Currencies daily % YTD % change change Latest Brazil real 3.0109 -0.51 -11.74 Mexico peso 15.1217 -0.74 -2.50 Chile peso 598.1 -0.39 1.39 Colombia peso 2427.5 -0.51 -1.63 Peru sol 3.1511 -0.19 -5.46 Argentina peso (interbank) 8.9450 0.03 -4.42 Argentina peso (parallel) 12.57 0.64 11.38 (Reporting by Walter Brandimarte; Editing by Jeffrey Benkoe)