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EMERGING MARKETS-Brazil markets shrug off S&P downgrade, focus on U.S. data

By Walter Brandimarte RIO DE JANEIRO, March 25 (Reuters) - Brazilian stocks and currencies gained along with other Latin American markets on Tuesday as investors shrugged off a downgrade of Brazil's credit rating and focused instead on encouraging U.S. consumer confidence data.

The Brazilian real rose 0.5 percent after falling slightly in the beginning of the session in a knee-jerk reaction to Standard & Poor's decision late on Monday to cut Brazil's credit rating to BBB-minus, its lowest investment grade level.

Even as the timing of the downgrade took some Brazilian policymakers by surprise, financial markets were unfazed by a move they had broadly priced in.

"It is like a student who knows he didn't do well in the exams," said Tarcisio Rodrigues, a director at Banco Paulista in Sao Paulo. "The downgrade only confirmed what was expected." Brazil's benchmark Bovespa index initially rose 0.9 percent as investors focused on data showing U.S. consumer confidence rose in March to its highest level in more than six years.

Market enthusiasm abated later, however, as key Wall Street indexes also erased most of their gains. As the S&P 500 index traded nearly flat, the Bovespa was only marginally higher while Mexico's IPC index dipped into negative territory.

Shares of Brazil's JBS SA, the world's largest meat producer by sales, slumped more than 5 percent after it missed analysts expectations for its fourth-quarter profit due surging operating costs.

On the other hand, shares of Brazil's Vale SA rose more than 1 percent as analysts bet the world's largest iron ore producer could benefit from exports to China if expectations that Beijing will act to support the country's economic growth prove correct.

Most Latin American markets had gained on Monday on speculation that China would unveil fresh stimulus measures to counter a weaker-than-expected performance of its manufacturing sector in the first quarter of the year.

Key Latin American stock indexes and currencies at 1635 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging 958.45 0.48 -4.87 Markets MSCI LatAm 3037.58 1.01 -6.05 Brazil Bovespa 48179.55 0.39 -6.46 Mexico IPC 39712.36 -0.27 -7.06 Chile IPSA 3681.46 0.62 -0.48 Chile IGPA 18239.33 0.5 0.07 Argentina MerVal 6152.25 1.07 14.12 Colombia IGBC 13264.62 0.99 1.48 Peru IGRA 14403.21 0.43 -8.57 Venezuela IBC 2332.32 0 -14.77 Currencies daily % YTD % Latest change change Brazil real 2.3045 0.74 2.27 Mexico peso 13.1385 0.32 -0.83 Chile peso 559.2 0.77 -5.92 Colombia peso 1977.22 0.90 -2.29 Peru sol 2.815 0.00 -0.78 Argentina peso 8.0000 -0.31 -18.84 (interbank) Argentina peso 10.85 0.92 -7.83 (parallel) (Additional reporting Bruno Federowski in Sao Paulo; Editing by Meredith Mazzilli)