(Updates market price) By Susan Mathew Oct 23 (Reuters) - Brazil stocks scaled new highs and the real currency jumped 1% on Wednesday after the Senate approved a crucial pension reform bill, while Chilean markets weakened ahead of a central bank decision on interest rates amid severe domestic unrest. Brazil's Senate approved the main text of the government's landmark pension reform proposal late on Tuesday. Once voting to approve the last four amendments concludes on Wednesday, the bill will be cleared to be signed into law. The reform is seen by the government and many economists as crucial to stabilizing Brazil's public finances and restoring business confidence, conditions they say will lead to stronger and more sustainable growth in Latin America's largest economy. The benchmark Bovepsa stock index rose to a new all-time high, led by banking shares and a 4% gain in electric engineering company WEG SA after it reported results. The real added another 1% to hit a near 7-week high. "Markets had already priced in the passage of reforms," said Elisabeth Andreae, EM analyst at Commerzbank. She warned of limited appreciation potential for the currency as there are other urgently needed reforms and markets are a bit skeptical about their passage as they may face strong resistance. In Chile, the peso lost 0.3%, while stocks shed 1.7% ahead of its central bank decision on monetary policy. Analysts expect a steeper interest rate cut as Latin America's fifth-largest economy saw violent protests against low wages and a high cost of living. Chile's state miner Codelco, the world's top copper producer, said one of its mines was shut and operations at a smelter drastically reduced amid the general strike. A Reuters poll from early October showed the central bank is expected to cut rates by a quarter-percentage basis point to 1.75%, while the recent turn of events have spurred bets of a deeper rate cut. "Recent domestic events should support (the central bank's) easing bias," analysts at Morgan Stanley said in a note. "While we think that a 50bp cut is possible in today's decision, we don't see it as the base case and think that the governing board would prefer to leave the door wide open for further cuts." Most other regional currencies made minor moves against a steady dollar, while stock markets were mixed with Mexico's IPC index gaining 0.2% and Colombian stocks dropping 0.6%. Key Latin American stock indexes and currencies at 1955 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1032.08 -0.19 MSCI LatAm 2787.36 0.85 Brazil Bovespa 107528.29 0.14 Mexico IPC 43453.25 0.21 Chile IPSA 4910.54 -1.65 Argentina MerVal 32661.25 -1.808 Colombia IGBC 13053.62 -0.58 Currencies Latest Daily % change Brazil real 4.0360 0.94 Mexico peso 19.1135 0.15 Chile peso 725.8 -0.28 Colombia peso 3391.36 1.11 Peru sol 3.345 0.12 Argentina peso (interbank) 58.9900 -0.49 (Reporting by Susan Mathew and Sruthi Shankar in Bengaluru; Editing by Alistair Bell)
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