(Updates with final prices, Mexican details)
By Bruno Federowski
BRASILIA, Jan 22 (Reuters) - Brazilian markets were range-bound on Monday as traders avoided big bets ahead of the trial of former President Luiz In??cio Lula da Silva, who is leading opinion polls for this year's elections.
Lula has vowed to reverse part of President Michel Temer's reform agenda if elected, but he could be barred from running if a higher court upholds his conviction for corruption at trial onWednesday.
In general, traders expect that to be the case, paving the way for a market-friendly successor who will stick to Temer's unpopular platform. Temer's approval rates have tumbled to single-digits in the wake of corruption scandals, and he has said he would not run for re-election.
Coupled with strong global demand for emerging market assets, those bets have underpinned a rally in Brazil's markets that drove its benchmark stock index to all-time highs and the Brazilian real to two-month peaks.
Miriam Tavares, the head of currency trading at AGK brokerage, said the Brazilian currency could strengthen even more in the case of a unanimous ruling on Wednesday, potentially driving it past the 3.20 per dollar milestone.
A unanimous decision among the three judges could make it harder for Lula to appeal, traders said.
The Brazilian real closed down 0.25 percent, while the benchmark Bovespa stock index rose 0.56 percent.
Shares of Centrais El?(C)tricas Brasileiras SA jumped over 7 percent after the government sent to Congress a draft bill proposing to privatize the state-controlled power utility. Other Latin American markets seesawed as concerns over a U.S. government shutdown stoked caution among investors.
On Monday, the U.S. Congress voted to end a three-day shutdown, approving another short-term funding bill as Democrats accepted promises from Republicans for a broad debate later on the future of young illegal immigrants. Mexico's S&P/BMV IPC rose 0.56 percent, driven by gains in breadmaker Bimbo , telecommunications firm America Movil and broadcaster Televisa .
Latin American stock indexes and currencies at 2220 GMT:Stock indexes daily % YTD %
LatestchangechangeMSCI Emerging Markets1240.25 0.146.91 MSCI LatAm 3088.80 0.519.22Brazil Bovespa 81675.42 0.566.90Mexico IPC 49974.48 0.561.26Chile IPSA 5827.91-0.484.73Chile IGPA 29287.26-0.394.67Argentina MerVal 33525.47 -0.2 11.51Colombia IGBC 11978.21 0.675.34
Currenciesdaily % YTD %
changechange
Latest Brazil real 3.2092-0.253.24
Mexico peso 18.6850-0.265.62
Chile peso 606 0.331.43Colombia peso 2852.45-0.124.42Peru sol 3.213 0.090.75
Argentina peso (interbank)19.145-0.81 -2.85 Argentina peso (parallel)19.75-0.56 -2.63 (Reporting by Bruno Federowski; editing by Grant McCool and Cynthia Osterman)
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