SAO PAULO, June 7 (Reuters) - Brazilian stocks and currencies on Wednesday advanced after a planned reform of labor regulations cleared a hurdle in Congress, but uncertainty over the outcome of an electoral court trial that could oust President Michel Temer limited gains. Temer's proposal to loosen labor laws won approval from the Senate's economic affairs committee on Tuesday, clearing the way for a full-house vote and reducing expectations that a growing political crisis could jeopardize his reforms agenda.
The benchmark Bovespa stock index rose 0.5 percent, driven higher by rising shares of banks such as Itaú Unibanco Holding SA, Banco Bradesco SA and Banco do Brasil SA. Still, the Brazilian real inched up only 0.2 percent as the TSE, Brazil's top electoral court, argued whether Temer received illegal campaign funding in 2014, when he ran for vice president with his leftist predecessor, Dilma Rousseff.
Temer's opponents see a ruling as a way out of the political crisis set off by corruption allegations leveled against the center-right leader, but a decision could take weeks, if not months, and could be appealed by Temer. Trading was muted in most Latin American markets ahead of key events scheduled for Thursday, when Britain will hold a national election, the U.S. Federal Bureau of Investigation's former director will testify to Congress and European Central Bank (ECB) policymakers meet to decide on policy. "Tomorrow may be the most important day of the quarter for investors," analysts at Brown Brothers Harriman wrote in a note to clients. Political noise has weighed on demand for risky assets in recent days, with MSCI's emerging stock benchmark slipping for a second day. Also contributing to caution were decisions by several Arab countries to cut diplomatic ties with Qatar, accusing it of supporting terrorism. Qatar vehemently denies the allegations.
Key Latin American stock indexes and currencies at 1510 GMT:
Stock indexes daily % YTD % change change
MSCI Emerging Markets 1014.90 -0.1 17.82 MSCI LatAm 2566.17 0.41 9.19 Brazil Bovespa 63263.73 0.49 5.04 Mexico IPC 49177.11 -0.08 7.74 Chile IPSA 4902.43 -0.19 18.09 Chile IGPA 24564.28 -0.17 18.47 Argentina MerVal 22368.92 0.05 32.22 Colombia IGBC 10765.24 -0.49 6.29 Venezuela IBC 83127.50 0.65 162.19 Currencies daily % YTD % change change
Brazil real 3.2696 0.20 -0.62 Mexico peso 18.1980 0.14 13.99 Chile peso 667.61 0.15 0.46 Colombia peso 2903 -0.29 3.39 Peru sol 3.262 0.12 4.66 Argentina peso (interbank) 16.0100 0.03 -0.84 Argentina peso (parallel) 16.3 0.49 3.19
(Reporting by Bruno Federowski; Editing by Jonathan Oatis)