By Dion Rabouin

Oct 25 (Reuters) - Recovery hopes in two of Latin America's largest economies, Brazil and Argentina, have triggered a surge in initial public offerings, with companies in mining, food, construction and fuel distribution set to test the markets in coming months.

More than 25 Latin American companies could go public within the next year, banking, exchange and market sources say, potentially adding greater heft to stock markets in regional economies where publicly traded companies have traditionally been underrepresented.

Latin American IPOs have so far pulled in $6.14 billion this year, or an elevenfold increase from the same period last year.

Companies such as Petrobras' fuel distribution unit BR Distribuidora, Brazilian zinc miner Votorantim Metais, Argentine foodmaker Molinos Canuelas and cement maker Loma Negra are expected to go public by December. The year has already seen IPOs from such high-profile names as retailer Grupo Carrefour Brasil SA, Mexican tequila maker Jose Cuervo and Brazil-based airline Azul.

"We would consider the increased number of IPOs to be more of an indicator of improving sentiment and both macro- and company-level fundamentals, not a sign of greed that signals a market top," said Eric Sprow, managing director of equities at AllianceBernstein.

The IPO boomlet has coincided with a wider rally in emerging markets, helped in Latin America by governments in Argentina and Brazil that have sought to ease regulations to turbocharge economic growth.

The amounts being raised are still a fraction of that seen in more developed markets. U.S. social media company Snap Inc on its own raised $3.9 billion, equivalent to more than half the total for all of Latin America's IPOs to date in 2017.

Argentina's market capitalization represented just 11.7 percent of its gross domestic product in 2016, according to the World Bank, down from 27.4 percent in 2003. In 2016, Brazil's market cap was 42.2 percent of GDP and Mexico's was just 33.5 percent. That compared with 147 percent for the U.S.

But the trend is rising.

In Brazil, sales of new stock have already topped their best year since 2013. Including follow-on offerings, equity sales could reach 40 billion reais ($12.3 billion), said a banker at a large global firm in Brazil, who asked not be named.

A top executive at one underwriter in Brazil, who asked not to be named, said he expects about nine more IPOs and secondary offerings in what he called a "very important year" for Brazil.

At least five Argentine companies are likely coming to market in the next 12 months, according to Marcos Wentzel, managing director of investment bank and brokerage firm Puente.