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EMERGING MARKETS-Brazil markets little changed, brush off S&P downgrade

SAO PAULO, Jan 12 (Reuters) - Brazilian financial markets were range-bound on Friday as investors mostly shrugged off a sovereign ratings downgrade by Standard & Poor's. S&P late on Thursday cut Brazil's credit rating deeper into junk territory as doubts grew about a presidential election in October and a push to trim its costly pension system.

The move was widely expected after lawmakers delayed in December a key vote on the unpopular pension bill to February, much closer to October's elections. Investors see the pension overhaul, a landmark proposal of President Michel Temer's administration, as crucial to curtailing growth of public debt and safeguarding economic growth for years to come. Indeed, some said the downgrade could help Temer pressure lawmakers into approving the plan to avoid further damage. "The government will certainly use this downgrade to pressure Congress, though it is still highly uncertain whether it will be successful in doing so," analysts at Coinvalores brokerage wrote in a client note. The Brazilian real was flat and interest rate futures were barely changed. The benchmark Bovespa stock index slipped 0.2 percent, with shares of real estate and utility firms among the biggest decliners. The Mexican peso edged higher for a second day, though uncertainty over the future of the North American Free Trade Agreement (NAFTA) kept a lid on gains. The peso weakened significantly on Wednesday after a Reuters report said Canada increasingly believes that President Donald Trump will soon announce his intention to withdraw from NAFTA.

Key Latin American stock indexes and currencies at 1230 GMT:

Stock indexes daily % YTD % change change

Latest

MSCI Emerging Markets 1206.77 0.82 3.33 MSCI LatAm 2966.99 0.17 4.73 Brazil Bovespa 79216.84 -0.19 3.68 Currencies daily % YTD % change change

Latest

Brazil real 3.2193 -0.05 2.92 Mexico peso 19.1835 0.48 2.69 Chile peso 604 0.22 1.76 Colombia peso 2856.48 -0.12 4.39 Argentina peso (interbank) 18.7000 -0.37 -0.53 Argentina peso (parallel) 19.36 -0.21 -0.67

(Reporting by Bruno Federowski; Editing by Bernadette Baum)