(Rewrites throughout, updates prices, adds market strategist's quote) By Aaron Saldanha April 3 (Reuters) - An index of Latin American currencies gained on Wednesday as broad-based optimism following a report the United States and China were nearing a trade deal overcame weakness of assets in Brazil, whose government opened the door to concessions in its proposed pension reforms.
Brazil's economy minister staunchly defended the government's proposal, insisting it is critical to fixing the country's "doomed" social security system.
Apart from Brazil, most Latin American assets rose.
MSCI's index of Latin American currencies rose 0.7 percent, supported by a softer dollar, while its Latin American stocks index rose 0.2 percent.
"While our base case remains that a social security reform that brings debt sustainability will pass ... the likelihood of further spikes in (Brazilian real) risk premium is high," Armando Armenta, a strategist at UBS, wrote in a note.
Brazil's real slid 0.4 percent on the day, while yields on local, 10-year bonds hit the 9 percent mark.
Sao Paulo-traded stocks gave up strong early gains to end 0.9 percent lower as broad-based losses exacted a heavy toll.
State-run oil firm Petroleo Brasileiro SA (Petrobras) saw its common shares and preferred shares fall 2.1 percent and 2.7 percent, respectively.
Amid the general weakness, miner Vale SA's shares gave up most of their early gains but ended up 0.3 percent. Vale benefited from iron ore futures in China seeing their best day in seven weeks.
Cia Energetica de Minas Gerais rose 1.4 percent as a director of the utility said it is considering a follow-on offering before mid-year of distributor Light SA, whose shares sank 7 percent.
Mexico's peso and stocks held their ground as positive sentiment around a possible U.S.-China trade deal was negated by U.S. President Donald Trump's threats to close the southern U.S. border with important trade partner Mexico.
Chile's peso rose 0.9 percent, following a 1 percent gain in the price of copper, the country's top export.
Colombia's peso firmed 0.7 percent, while local stocks added 0.3 percent.
Argentina's peso softened while its stocks benchmark fell 3.8 percent to a three month-closing trough, on losses across the board.
Argentina requested a waiver from the International Monetary Fund as some data would not be available in time for the fund's third review this week of $56.3 billion in standby financing agreed last year.
Latin American stock indexes and currencies at 2057 GMT: Stock indexes daily % Latest change MSCI Emerging Markets 1079.80 0.81 MSCI LatAm 2764.72 0.19 Brazil Bovespa 94491.48 -0.94 Mexico IPC 43339.75 0.03 Chile IPSA 5222.96 0.28 Argentina MerVal 31765.11 -3.76 Colombia IGBC 13052.92 0.26 Currencies daily % change Latest Brazil real 3.8710 0.17 Mexico peso 19.2236 0.02 Chile peso 666.5 0.99 Colombia peso 3121 0.74 Peru sol 3.295 0.46 Argentina peso (interbank) 42.8400 -0.09 (Reporting by Aaron Saldanha in Bengaluru; editing by Grant McCool)