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EMERGING MARKETS-Brazil markets steady ahead of ex-president Lula's trial

BRASILIA, Jan 22 (Reuters) - Brazilian markets were range-bound on Monday as traders avoided big bets ahead of the trial of former President Luiz Inácio Lula da Silva, who is leading opinion polls for this year's elections. Lula has vowed to revert part of President Michel Temer's reform agenda if elected, but he could be barred from running if a higher court upholds his conviction for corruption at trial on Wednesday. In general, traders expect that to be the case, paving the way for a market-friendly successor who will stick to Temer's unpopular platform. Temer's approval rates have tumbled to single-digits in the wake of corruption scandals and he has said he would not run for reelection. Coupled with strong global demand for emerging market assets, those bets have underpinned a rally in Brazil's markets that drove its benchmark stock index to all-time highs and the Brazilian real to two-month peaks. Miriam Tavares, the head of currency trading at AGK brokerage, said the Brazilian currency could strengthen even more in the case of a unanimous ruling on Wednesday, potentially driving it past the 3.20 per dollar milestone. A unanimous decision among the three judges could make it harder for Lula to appeal, traders said. The Brazilian real was nearly flat in early afternoon trading, while the benchmark Bovespa stock index rose 0.2 percent. Shares of Centrais Elétricas Brasileiras SA jumped over 10 percent after the government sent to Congress a draft bill proposing to privatize the state-controlled power utility. Other Latin American markets seesawed as concerns over a possible U.S. government shutdown stoked caution among investors. On Thursday, the U.S. House of Representatives passed a bill to fund government operations through Feb. 16 and avoid agency shutdowns from Saturday when existing allocations expire. The bill has yet to be approved by the Senate, where it faces an uncertain future.

Latin American stock indexes and currencies at 1720 GMT:

Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 1237.54 0.4 6.4 MSCI LatAm 3077.00 0.12 8.67 Brazil Bovespa 81367.13 0.18 6.50 Mexico IPC 49968.04 0.55 1.24 Chile IPSA 5820.19 -0.62 4.59 Chile IGPA 29245.88 -0.53 4.52 Argentina MerVal 33531.36 -0.18 11.53 Colombia IGBC 12011.82 0.95 5.64 Currencies daily % YTD %

change change Latest

Brazil real 3.2045 -0.12 3.40 Mexico peso 18.7000 -0.34 5.34 Chile peso 606 0.40 1.43 Colombia peso 2855.85 -0.45 4.42 Peru sol 3.213 0.09 0.75 Argentina peso (interbank) 19.1250 -0.69 -2.75 Argentina peso (parallel) 19.72 -0.15 -2.48

(Reporting by Bruno Federowski; editing by Grant McCool)