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EMERGING MARKETS-Brazil real weakens on election jitters; LatAm currencies down

down@ BRASILIA, May 14 (Reuters) - The Brazilian real weakened on Monday after a presidential poll showed strong support for candidates seen by investors as unwilling to pursue a market-friendly agenda, while the Argentine peso extended its recent selloff to all-time lows. Excluding jailed former president Luiz Inacio Lula da Silva, who will likely be barred if he registers to run, the Brazilian survey showed law-and-order congressman Jair Bolsonaro held on to his lead in early polling ahead of the October elections. Bolsonaro's statements on economic policy have been erratic. Environmentalist Marina Silva, who in the previous elections was backed by several prominent economists but whose backing in Congress remains in doubt, was the runner-up, challenged by leftist Ciro Gomes. Traders fear President Michel Temer's successor may back away from his administration's pledges of fiscal austerity, privatization and deregulation. Many analysts view the unpopular program as crucial for Brazil to curb public debt growth and regain its investment grade credit rating. The polling data helped to offset the effect of increased central bank intervention in the wake of a weekslong emerging market selloff that drove the Brazilian real and the Mexican peso to multiyear lows. Most Latin American currencies extended losses on Monday due to lingering concerns that a widening U.S. fiscal deficit and accelerating inflation could bump up its bond yields, dampening the allure of emerging-market assets. The Argentine peso fell around 5 percent after the International Monetary Fund (IMF) said a target exchange rate will not be a condition of a financing deal with Argentina.

Argentina requested a "high access stand-by arrangement" from the IMF last week after the peso depreciated rapidly, prompting the central bank to sell reserves and hike interest rates to 40 percent in a bid to contain one of the world's highest inflation rates as well as stop the peso slide. Latin American stock markets were mixed as rising crude prices lifted shares of oil drillers. Brazil's benchmark Bovespa stock index was up 0.6 percent, lifted by shares of state-owned Petróleo Brasileiro SA . Shares of steelmaker Cia Siderúrgica Nacional also rose ahead of the release of its quarterly earnings after market close. Analysts at Banco BTG Pactual SA increased their price-target on the stock to 12 reais from 11 reais, but kept a "neutral" recommendation.

Key Latin American stock indexes and currencies at 1550 GMT:

Stock indexes daily % YTD % change change

Latest

MSCI Emerging Markets 1169.16 0.4 0.52 MSCI LatAm 2850.81 -0.71 1.53 Brazil Bovespa 85753.24 0.63 12.24 Mexico IPC 46652.53 -0.16 -5.47 Chile IPSA 5705.63 0.05 2.53 Chile IGPA 28838.91 0.15 3.07 Argentina MerVal 29942.47 0.3 -0.41 Colombia IGBC 12362.10 0.02 8.72 Currencies daily % YTD % change change

Latest

Brazil real 3.6253 -0.70 -8.61 Mexico peso 19.5400 -0.51 0.81 Chile peso 623.68 -0.65 -1.45 Colombia peso 2832.6 0.06 5.27 Peru sol 3.263 -0.21 -0.80 Argentina peso (interbank) 24.6000 -5.08 -24.39 Argentina peso (parallel) 25.6 -5.27 -24.88

(Reporting by Bruno Federowski; Editing by David Gregorio)