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EMERGING MARKETS-Brazil stocks sink as Petrobras, OGX weigh

* Moody's cuts key Petrobras debt rating

* OGX says oil field to yield less than expected output

* Brazil Bovespa falls 0.45 pct, Mexico IPC up 0.6 pct

By Asher Levine

BUENOS AIRES, Oct 4 (Reuters) - Brazil's benchmark stock

index headed for its lowest close in nearly a month on Friday as

shares of state-run oil company Petrobras dropped after Moody's

Investors Service cut the rating on the company's long-term,

foreign currency debt.

Mexico's IPC stock index reversed early losses to

notch its first gain in three sessions, while Chile's bourse

moved higher.

Moody's announced the change to Petrobras' rating late

Thursday, citing concerns that fuel subsidies and huge

investment commitments will cause the company's debt to grow

until at least 2015.

Preferred shares of Petrobras, formally known as Petroleo

Brasileiro SA, dropped 1.6 percent, contributing to a

0.45 percent decline in Brazil's benchmark Bovespa stock index

, which is set to close the session with a nearly 3

percent weekly loss.

"Really, its not a surprise, the company's balance sheet has

some worrisome aspects, such as high leverage and the mismatch

in gas prices, which has hurt the company a lot," said Joao

Pedro Brugger, an analyst with Leme Investimentos in

Florianopolis, Brazil.

Unable to meet domestic demand on its own, Petrobras imports

gasoline and sells it at a loss at the government's insistence

in order to help control inflation.

"The stronger dollar makes the situation worse," Brugger


OGX Petroleo e Gas Participacoes SA, the

debt-laden oil company controlled by embattled Brazilian tycoon

Eike Batista, fell 4.5 percent after the company said on

Thursday its Tubarão Martelo offshore oil field has less than a

third of the total oil and equivalent natural gas it called

recoverable when OGX declared the area commercially viable last


Analysts and sources have told Reuters the company is likely

to run out of cash this month and is preparing to file for

bankruptcy within the next 30 days. The company said late

Thursday that it was considering all measures to protect assets

and continue in business.

Mexico's IPC index added 0.6 percent, led by a 1.3

percent rise in shares of broadcaster Grupo Televisa

and a 1.5 percent gain in conglomerate Alfa


Shares of retail giant Wal-Mart de Mexico fell

1.14 percent after the company said on Thursday that sales at

its Mexican stores open at least a year fell sharply in

September, when massive flooding hit much of the country.

Chile's IPSA index rose for the second straight

session, adding 0.48 percent to 3,844.93.

Latin America's key stock indexes at 1409 GMT:

Stock indexes daily % YTD %

Latest change change

MSCI LatAm 3,346.15 0.33 -12.18

Brazil Bovespa 52,255.85 -0.45 -14.27

Mexico IPC 41,084.25 0.6 -6.00

Chile IPSA 3,844.93 0.48 -100.00

Chile IGPA 18,896.81 0.37 -100.00

Argentina MerVal 4,853.27 -0.27 70.03

Colombia IGBC 14,035.99 -0.18 -4.62

Peru IGRA 15,597.54 -0.32 -24.39

Venezuela IBC 1,747,641.0 0.03 270.71