June 22 (Reuters) - Latin American currencies firmed on Tuesday as stronger-than-expected German economic data offset concerns that Europe's efforts to confront debt troubles may crimp global economic growth.

Brazil's real and Mexico's peso gained after German business sentiment rose in June to its highest level in more than two years.

The report offset jitters after Britain unveiled the harshest budget in a generation, slashing spending, raising sales tax and slapping a levy on banks.

The Ifo report was good and perhaps it is reducing the uncertainty in the market about Europe's fiscal deficits, said Jaime Ascencio, an analyst at brokerage Actinver in Queretaro, Mexico.

The idea is that the budget cuts will not affect economies so much. But the market is waiting for more data and above all corporate earnings reports to confirm that this situation is not having an impact, Ascencio said.

Weighing on markets, investors reassessed whether China's weekend vow to ease control over its foreign exchange rate would quickly spur gains in the yuan. A stronger yuan could boost the volume of imports of Brazilian iron ore and soy or Chilean copper.

The Brazilian real (BRBY) bid 0.34 percent stronger at 1.765 reais per U.S. dollar on the local spot market, while the Mexican peso MXN= firmed 0.16 percent to 12.5095 per dollar. The currencies later lost ground as U.S. stocks weakened.

Chile's peso CLP= fell 0.32 percent as investors worried about global demand for copper, the country's top export.

The bid quote for the one-month non-deliverable forward contract BRL1MNDFOR=, one of the most popular ways to trade the real's movements due to Brazil's currency controls, firmed to 1.7796 from 1.7830 at the end of the previous session, implying slightly less depreciation over the coming weeks.

Analysts cited concerns that the central bank could increase its intervention in the local market by stepping up purchases of dollars in the local market.

A rush of economic data in Brazil failed to give the market direction as investors kept an eye on developments abroad.

Data showed the current account deficit widened in May over the year-ago period.

Yields edged lower on Brazilian interest rate futures <0#DIJ:> after data showed inflation had slowed in the month to mid-June. Falling food prices eased pressure on the country's central bank to cool the economy by raising the cost of borrowing.

While this fall in inflation will not likely deter Brazil's central bank from hiking interest rates another 75 basis points at the July Copom meeting, slower headline inflation will reduce to near zero any risk of accelerating the pace of rate hikes, wrote Tony Volpon, a strategist with New York-based Nomura Securities, in a note to clients.

The yield on the contract due January 2011 DIJF1 bid down 1 basis point to 11.28 percent, while the contract due January 2012 DIJF2 bid down 4 basis points to 12.10 percent.

Mexico's bond market was little changed. Yields on the government's benchmark 10-year peso bond MX10YT=RR bid flat at 7 percent. (Reporting by Samantha Pearson in Sao Paulo and Michael O'Boyle in Mexico City; editing by Jeffrey Benkoe)