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UPDATE 1-Brazil delays budget target announcement, no date set

(Recasts with postponement, background)

BRASILIA, Aug 14 (Reuters) - Brazil's government delayed the announcement of looser budget targets for 2017 and 2018, previously expected for Monday, as authorities struggled to estimate revenues given strong opposition in Congress to tax hikes, five sources told Reuters.

The government has been in talks since last week to increase its primary budget deficit targets for 2017 and 2018 to 159 billion reais ($49.8 billion). Brazil currently targets a deficit of 139 billion reais in 2017 and 129 billion reais in 2018 before interest rate payments.

There is no date set for an official announcement, the sources said.

The protracted budget talks underscore the uphill battle for President Michel Temer to maintain support for austerity measures, including a major pension overhaul, as a corruption simmers and next year's general elections approach.

Members of Temer's economic team, including Finance Minister Henrique Meirelles, previously wanted to wait until September to weigh looser budget goals, but agreed to move up talks under pressure from a fractious coalition in Congress.

Parties who helped the president stay in office by blocking bribery charges against him earlier this month are now demanding they be rewarded with cabinet positions. Allies in Congress doubt Temer can achieve anything but watered-down measures to mitigate the severe fiscal crisis.

The budget targets are closely watched by investors as a measure of fiscal discipline.

Brazil lost its investment-grade credit rating in 2015 after missing the goals for years. Temer, who replaced impeached President Dilma Rousseff in 2016, repeatedly pledged to set realistic targets and meet them every year to regain credibility with investors.

($1 = 3.19 reais) (Reporting by Marcela Ayres and Leonardo Goy; Writing and additional reporting by Silvio Cascione; Editing by Chizu Nomiyama and Lisa Shumaker)