Brazil may hold off 50 bln reais spending -sources

* Analysts expected freeze of 60 bln to 70 bln reais

* Finance Minister Mantega pushing for smaller freeze

* Gov't confident of meeting fiscal, inflation targets

By Patricia Duarte and Tiago Pariz

BRASILIA, Feb 7 (Reuters) - Brazil's government is considering a budget freeze of up to 50 billion reais ($29 billion) this year, two government sources told Reuters on Tuesday, an amount some analysts say is not enough to meet debt-reduction goals and bring inflation down.

President Dilma Rousseff's administration is in the latter stages of the freeze, part of annual adjustments to spending aimed at slowing inflation and signaling the government's commitment to fiscal austerity, said the sources, who are not allowed to speak publicly on the issue.

"That freeze could be slightly less than 50 billion reais, but everything hinges on final talks with" the president, so "things could ultimately change," one of the sources said.

Behind the push for a smaller freeze is Finance Minister Guido Mantega, who says the government could boost investments without having to resort to a stringent spending freeze, the sources said. The government has said repeatedly it will meet its primary budget surplus goal of around 3.1 percent of gross domestic product in 2012.

The 50 billion reais freeze, which equals about 3 percent of this year's budget excluding refinancing spending, is about the same size as last year's announced freeze. In a nod to markets, Rousseff was able to meet the full fiscal target in 2011.

However, most private analysts said this time around Rousseff needs to put between 60 and 70 billion reais worth of spending on hold to meet the primary budget surplus target.

Rousseff, a career technocrat-turned-politician who keeps close tabs on economic affairs, is facing mounting pressure to raise spending this year to shore up an economy that flatlined in the third quarter.

She is said to be prioritizing economic growth of at least 4 percent this year even if it means missing the fiscal target and allowing higher inflation.

A legally mandated 14 percent hike in the minimum wage that boosts government expenditures and an expected slowdown in tax revenues due to a weaker global economy are also seen making the road to fiscal austerity tougher this year.

Government officials acknowledged the challenges of meeting the target but said it should only have a marginal effect on inflation this year.

The size of the budget freeze is also key for the central bank to keep cutting one of the world's highest interest rates to single-digit territory this year.

The primary budget surplus is closely watched by investors since it measures a country's ability to service its debt. It represents the excess of revenues over expenditures before interest payments are taken into account.