UPDATE 1-Moody's reviews Brazil ratings for possible upgrade

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NEW YORK, May 24 (Reuters) - Moody's Investors Service placed Brazil's key ratings on review for possible upgrade on Thursday, as it determines if the country's better economic conditions will lead to an improved debt profile.

Moody's currently rates Brazil's foreign- and local-currency debt at "Ba2," or two notches below investment grade, and its country ceiling at "Ba1." The agency's decision follows an upgrade by Fitch and Standard and Poor's earlier this month.

"While Brazil's external vulnerability indicators have sustained an impressive reduction, the improvement in government debt indicators has been less striking," said Moody's analyst Mauro Leos in the report.

"Still, the domestic debt structure is improving, and government debt ratios are trending downwards", he added.

Fitch Ratings had already upgraded Brazil's sovereign ratings to one notch below investment grade on May, 10, while Standard and Poor's did the same on the following week.

The Moody's news had no immediate impact on Brazil's markets.

The Bovespa leading stock index .BVSP was down 1.97 percent at 1642 GMT while the local currency, the real BRBY, was 0.77 percent weaker at 1.964 per U.S. dollar.

Brazil's benchmark bond, the Global 2040 <BRAGLB40=RR> was falling 0.375 to bid at 134.188 while the J.P. Morgan Emerging Market Bond Index (EMBI+) 11EMJ for Brazil was widening 1 basis point to 140 bps.

Brazil has been actively campaigning for a better credit classification from ratings agencies in an attempt to attract more long-term investment into the country.