EMERGING MARKETS-Brazil stocks, currency up after labor reform approved

SAO PAULO, July 12 (Reuters) - Brazil's stocks and currency rose on Wednesday after an overhaul of the country's labor laws cleared a Senate vote by a wider margin than expected, suggesting lawmaker support for President Michel Temer's reform platform remained strong. The labor bill was passed in a 50 to 26 vote following approval in the lower house of Congress and will be sent to Temer to be signed into law. The changes, which were opposed by trade unions, give more leeway to collective bargaining and reduce the scope for legal action in labor disputes. Investors see them as crucial to lift long-term growth in Latin America's largest economy, as part of a package of structural reforms that also includes measures to streamline Brazil's bloated pension system. The Brazilian real strengthened 0.6 percent, while Brazil's benchmark Bovespa stock index advanced 0.4 percent. Wide lawmaker support for the labor bill eased investor fears that a mounting corruption scandal might have damaged the outlook for Temer's agenda. Shares of state-controlled oil company Petróleo Brasileiro SA led gains in the index after its board approved an initial public offering of shares for its fuel distribution unit. A ruling by regulator CVM to reverse an earlier decision ordering Petrobras, as the company is known, to restate financial statements in recent years also fueled demand for its stocks. Other Latin American markets also traded higher after Federal Reserve Chair Janet Yellen indicated that the U.S. central bank may raise interest rates less than previously suggested. In a prepared testimony to be delivered to Congress, Yellen said interest rates "would not have to rise all that much further" to reach what the Fed considers a neutral rate. A slower pace of rate hikes would increase the allure of high-yielding emerging market assets. The Mexican peso firmed 0.5 percent, while the Colombian peso advanced 0.7 percent, Both currencies also found support in higher crude prices following a decline in U.S. fuel inventories and a cut in the U.S. government's forecast for crude output.

Key Latin American stock indexes and currencies at 1445 GMT:

Stock indexes daily % YTD %

change change Latest

MSCI Emerging Markets 1029.22 1.08 18.08 MSCI LatAm 2642.83 1.07 11.71 Brazil Bovespa 64073.54 0.38 6.39 Mexico S&P/BVM IPC 50801.73 0.58 11.30 Chile IPSA 4931.71 0.75 18.80 Chile IGPA 24623.03 0.67 18.76 Argentina MerVal 22360.50 1.05 32.17 Colombia IGBC 11040.03 0.42 9.00 Venezuela IBC 125766.28 -0.11 296.67 Currencies daily % YTD %

change change Latest

Brazil real 3.2319 0.61 0.54 Mexico peso 17.8185 0.51 16.42 Chile peso 663.61 0.44 1.07 Colombia peso 3052 0.74 -1.65 Peru sol 3.25 0.18 5.05 Argentina peso (interbank) 16.9650 0.25 -6.42 Argentina peso (parallel) 17.38 0.23 -3.22

(Reporting by Bruno Federowski; Editing by Jonathan Oatis)