(Updates prices, adds details on Mexican peso)
By Bruno and Federowski
SAO PAULO, Jan 12 (Reuters) - Brazil's benchmark index remained flat on Friday to hew close to its recent record high, shrugging off a sovereign ratings downgrade by Standard & Poor's, while Mexico's peso gained on market optimism that key trade talks will continue.
S&P 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 last December pushed a key vote on the unpopular pension bill to February.
Investors see the pension overhaul, a landmark proposal of President Michel Temer, as crucial to curtailing public debt and safeguarding long-term economic growth.
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.
Equities in real estate and utilities were among the decliners on Brazil's benchmark Bovespa stock index while the real remained flat.
The Mexican peso strengthened 1.13 percent, helped by comments from U.S. President Donald Trump published Thursday that he would be "flexible" on his threat to withdraw from the North American Free Trade Agreement (NAFTA) because Mexico faces a presidential election in July. "Trump's statements helped the Mexican currency to cut losses and reach its best level yet in 2018. Investors now believe that the NAFTA renegotiation process will continue," CI Bank said in a report.
The next round of negotiations will take place later this month.
Mexico's benchmark IPC index gained slightly, partially pushed by bank Grupo Financiero Banorte , whose shares rose 2.74 percent.
Key Latin American stock indexes and currencies at 2050 GMT:Stock indexesLatestDailyYTD pct
pct change
changeMSCI Emerging Markets1,209.71 1.06 3.33 MSCI LatAm 2,990.31 0.96 4.73 Brazil Bovespa 79,349.12-0.02 3.86Mexico IPC 49,141.690.7-0.43Chile IPSA 5,733.35 0.27 3.03Chile IGPA 28,829.85 0.26 3.03Argentina MerVal 32,762.66 2.13 8.97Colombia IGBC 11,623.57-0.22 2.22Venezuela IBC 1,649.3618.5730.58
Currencies LatestDailyYTD pct
pct change
changeBrazil real 3.2058-0.03 3.35Mexico peso 19.0590 1.13 3.36Chile peso 602.86 0.40 1.96Colombia peso 2,859.55-0.23 4.28Peru sol 3.216 0.06 0.65Argentina peso18.6800 0.16-0.43(interbank) Argentina peso (parallel) 19.49-0.41-1.33 (Reporting by Bruno Federowski, Flavia Bohone, Daina Beth Solomon and Miguel Angel Gutierrez; Editing by Bernadette Baum and Diane Craft)
Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.