(Updates prices) By Bruno Federowski SAO PAULO, March 17 (Reuters) - Brazilian stocks fell sharply on Friday as shares of meatpackers JBS SA and BRF SA slumped after federal police targeted their offices as part of an investigation into alleged bribery of food inspectors and politicians.
The probe, known as "Operation Weak Flesh," uncovered about 40 cases of meatpackers who had paid officials to overlook unsanitary practices such as processing rotten meat and running plants with traces of salmonella, police said.
Common shares in JBS fell nearly 11 percent, the biggest decline since Oct. 26, when a government agency vetoed a program to move some operations outside Brazil. Shares in BRF slumped to their lowest level since late-2012.
Shares of education companies Kroton Educacional SA and Estácio Participações SA also fell sharply on a report that top managers at Estácio were attempting to block a sale to its larger rival Kroton.
Brazil's benchmark Bovespa stock index fell 2.39 percent. Still, the Brazilian real strengthened, reflecting expectations of inflows stemming from a successful airport auction on Thursday.
Other Latin American currencies were mostly stronger, extending gains into a third day as traders predicted that the U.S. Federal Reserve would only increase interest rates at a gradual pace in coming months.
The Mexican peso firmed 0.83 percent, while the Colombian peso strengthened 0.2 percent.
Key Latin American stock indexes and currencies at 2300 GMT: Stock indexes daily % YTD % Latest change change MSCI Emerging Markets 965.57 0.35 11.98 MSCI LatAm 2614.88 -0.37 12.13 Brazil Bovespa 64209.94 -2.39 6.61 Mexico IPC 48593.44 1.12 6.46 Chile IPSA 4652.40 0.78 12.07 Chile IGPA 23329.76 0.72 12.52 Argentina MerVal 19434.00 -0.85 14.87 Colombia IGBC 9915.11 -0.49 -2.10 Venezuela IBC 37885.01 0.27 19.49 Currencies daily % YTD % change change Latest Brazil real 3.1014 0.47 4.77 Mexico peso 19.1 0.83 8.41 Chile peso 661.1 0.17 1.45 Colombia peso 2911.72 0.20 3.08 Peru sol 3.247 0.15 5.14 Argentina peso (interbank) 15.5400 -0.06 2.16 Argentina peso (parallel) 16.02 0.12 4.99 (Reporting by Bruno Federowski; Editing by Tom Brown, Bernard Orr)