SAO PAULO, Sept 11 (Reuters) - Brazilian stocks and currency fell on Friday as political and economic fears mounted in Latin America's largest economy, while caution about a key U.S. interest rate decision next week weighed on the entire region.
The Brazilian real lost 0.7 percent in a second straight session of losses following a Wednesday night decision by Standard & Poor's to cut the country's credit rating to junk.
An overwhelming majority of economists polled by Reuters said they expect Fitch Ratings or Moody's Investors Service to also downgrade Brazil to junk in coming months, although both agencies have signaled they are in no rush to make that move.
Political uncertainty also left investors cautious after Brazil's Supreme Court said it had received a request from federal investigators to question former President Luiz Inacio Lula da Silva in a political kickback scheme engulfing state-run oil company Petroleo Brasileiro SA.
Lula is the political mentor of President Dilma Rousseff and the most powerful figure in the ruling Workers' Party. The growing political crisis, which has led to calls for Rousseff to step down, has weakened the president's ability to pass crucial austerity measures through Congress.
Preferred shares of Petrobras, as the oil company is known, fell 4 percent and weighed the most on Brazil's Bovespa index , which closed 0.3 percent lower.
Benchmark stock indexes also fell across the region as investors feared the Federal Reserve could begin raising interest rates next week, even as U.S. consumer confidence and inflation data supported the case for rates to remain where they are for a little longer.
Key Latin American stock indexes and currencies at 2000 GMT: Stock indexes daily % YTD % change change Latest MSCI Emerging Markets 803.87 -0.04 -15.91 MSCI LatAm 1962.4 -0.38 -27.79 Brazil Bovespa 46379.80 -0.27 -7.25 Mexico IPC 42785.27 -0.24 -0.84 Chile IPSA 3748.68 -0.4 -2.66 Chile IGPA 18315.16 -0.42 -2.94 Argentina MerVal 10909.51 -1.44 27.16 Colombia IGBC 9520.52 -0.92 -18.17 Venezuela IBC 14181.14 -0.2 267.51 Currencies daily % YTD % change change Latest Brazil real 3.8783 -0.74 -31.48 Mexico peso 16.822 -0.29 -12.35 Chile peso 687.75 -0.40 -11.83 Colombia peso 3040.5 0.21 -21.46 Peru sol 3.2081 0.19 -7.14 Argentina peso (interbank) 9.3500 -0.03 -8.56 Argentina peso (parallel) 15.47 0.45 -9.50 (Reporting by Walter Brandimarte; Editing by Andrew Hay)