EMERGING MARKETS-Brazilian real rises as Batista plea deal threatened

(Updates prices) SAO PAULO, Sept 5 (Reuters) - Brazil's currency rose on Tuesday after the country's top prosecutor threatened to partially revoke a plea deal that has supported corruption charges against President Michel Temer. A diminished chance for a successful prosecution of Temer could allow the government to focus on its market-friendly reform agenda, traders said. Prosecutor General Rodrigo Janot said that billionaire meat tycoon Joesley Batista and a fellow state's witness seemed to have inadvertently recorded a four-hour conversation discussing crimes not covered in their plea bargain. Traders said the news drew fresh scrutiny to the accord and could delay or weaken new charges that Janot was expected to bring against Temer in coming weeks. "This should bolster optimism among government allies in Congress toward a potential approval of pension reform this year still," traders at Correparti brokerage wrote in a client note. The Brazilian real strengthened as much as 0.8 percent to a one-month high, ending the day up nearly 0.6 percent. The cost of insuring against a Brazilian sovereign default for five years fell to the lowest level in almost three years. The country's benchmark Bovespa stock index briefly breached the 73,000 milestone for the first time since 2008, lifted by blue chips such as state-controlled oil company Petróleo Brasileiro SA, state lender Banco do Brasil SA and miner Vale SA. But the stock index closed down about 0.16 percent, under pressure from Wall Street. Shares of JBS SA, the meatpacker owned by the Batista brothers, slumped as much as 10 percent, the biggest daily decline in 14 weeks. Other Latin American currencies also traded higher after an influential Federal Reserve policymaker said the U.S. central bank should be cautious about raising interest rates until it is confident that inflation will rebound toward the Fed's 2 percent target. A recent string of weaker-than-expected U.S. economic figures has cast doubt on the Fed's plan to hike rates a third time this year, fostering demand for high-yielding emerging market assets.

Key Latin American stock indexes and currencies at 1953 GMT:

Stock indexes daily YTD % Latest % change


MSCI Emerging Markets 1083.89 0.05 25.64 MSCI LatAm 2897.28 -0.14 23.95 Brazil Bovespa 72012.82 -0.16 19.57 Mexico IPC 50291.22 -1.05 10.18 Chile IPSA 5133.18 -0.29 23.65 Chile IGPA 25657.50 -0.25 23.75 Argentina MerVal 24045.07 1.42 42.13 Colombia IGBC 11217.70 -0.17 10.76 Venezuela IBC 269781.34 1.95 750.91 Currencies daily YTD % % change

Latest change

Brazil real 3.1185 0.57 4.19 Mexico peso 17.9165 -0.23 15.78 Chile peso 622.76 0.23 7.70 Colombia peso 2929 0.00 2.48 Peru sol 3.237 0.00 5.47 Argentina peso (interbank) 17.2300 0.29 -7.86

(Reporting by Bruno Federowski; Editing by Dan Grebler and Leslie Adler)