(Updates with final prices, details from Mexico) By Bruno Federowski SAO PAULO, May 26 (Reuters) - Brazil's currency and stocks rose on Friday as traders hoped for progress on an ambitious reform agenda despite a growing political crisis ensnaring President Michel Temer. The Brazilian real strengthened 0.54 percent, but remained far from the two-month peaks seen before the political scandal over bribery allegations broke out last week. Brazil's benchmark Bovespa stock index rose 0.9 percent. Shares of state-controlled power utility Centrais Elétricas Brasileiras SA rose sharply, rebounding after ranking among the top decliners in the recent selloff. Efforts by Temer's administration to foster trust in plans to streamline Brazil's pension system and reform labor laws seem to have to borne fruit among investors. House Speaker Rodrigo Maia has said he expects the lower house to vote on pension reform by mid-June, clearing the way for a final Senate vote. That cautious optimism has rekindled bets that the central bank would cut interest rates by a brisk 100 basis points next week despite market volatility drive by political turmoil, driving yields on rate futures lower. Also contributing to the drop were expectations of rapidly slowing inflation after state-controlled oil company Petróleo Brasileiro SA announced a cut on fuel prices. Mexico's peso closed near flat after earlier this week reaching its strongest level against the dollar since Donald Trump's election as U.S. president in November. The currency has benefited from rising international crude prices. Mexico's IPC stock index rose by 0.56 percent, lifted by an increase in the share price of billionaire Carlos Slim's flagship company, telecoms giant America Movil. On Thursday, emerging stocks had inched to two-year highs, supported by relatively dovish minutes from the last meeting of the U.S. Federal Reserve. But disappointment over the scale of oil supply cuts announced by OPEC have kept the MSCI emerging equity index from adding significantly to gains. Key Latin American stock indexes and currencies at 2000 GMT: Stock indexes Latest Daily YTD pct pct change change MSCI Emerging Markets 1,016.00 0.14 17.66 MSCI LatAm 2,573.08 0.86 8.99 Brazil Bovespa 63,772.10 0.86 5.89 Mexico IPC 49,688.27 0.56 8.86 Chile IPSA 4,892.69 0.42 17.86 Chile IGPA 24,545.33 0.42 18.38 Argentina MerVal 22,146.66 2.13 30.91 Colombia IGBC 10,752.87 0.26 6.21 Venezuela IBC 73,959.10 -0.22 133.27 Currencies Latest Daily YTD pct pct change change Brazil real 3.2654 0.54 -0.50 Mexico peso 18.5085 -0.02 12.08 Chile peso 672.0 -0.42 -0.19 Colombia peso 2,910.00 -0.27 3.14 Peru sol 3.274 -0.18 4.28 Argentina peso (interbank) 16.000 0.52 -0.78 Argentina peso (parallel) 16.29 -0.31 3.25 (Additional reporting by Miguel Gutierrez; Editing by G Crosse)
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