EMERGING MARKETS-Brazilian assets rise as investors await pivotal election

By Sudeshna Ghoshal and Johann M Cherian

Oct 23 (Reuters) - Brazilian stocks rose on Friday as investors geared up for the presidential runoff in Latin America's largest economy, while the currency hit its highest in more than a week.

Voters will decide between right-wing candidate Senator Flavio Bolsonaro and incumbent President Luiz Inacio Lula da Silva on Sunday. Bolsonaro had performed better than expected earlier in the month, but recent polls have shown his lead over Lula was narrowing, sparking volatility in local markets.

The real has rallied 3.4% this month, marking its biggest monthly gain since April, while local stocks .BVSP have advanced 10.3%, on course for their strongest month since January, on expectations that the senator would adopt fiscal consolidation policies if he won.

However, analysts said he was yet to offer clarity on the subject.

On Friday, the currency rose 0.9% against the dollar, while stocks were little changed. International bonds , were marginally higher, while the equity benchmark rose 0.6%.

Ahead of the vote, data showed consumer inflation rose less-than-expected in the month to mid-October.

"Brazil is at the verge of fiscal dominance dynamics, and anything that improves the fiscal situation can lower risk premia," said Alejandro Cuadrado, managing director, global head FX & LatAm Strategy at BBVA.

"Lower risk premia implies the central bank can find more room to cut, lower interest rates, imply better valuations for Brazilian equities and potential growth and that brings flows from the offshore into Brazil."

MSCI indexes tracking regional equities .MILA00000PUS and currencies .MILA00000CUS rose 1.2% and 0.6%, respectively.

Brent crude prices rose over 3% after Houthi attacks in Saudi Arabia stoked concerns over further disruption to energy supplies from the Middle East.

Oil exporter Colombia's peso appreciated the most among regional currencies. It was last up nearly 1% after hitting a near one-month high.

Public finances were also in focus as the country's government cut this year's spending budget by 13.8 trillion pesos ($4.33 billion), although it was smaller than previously announced.

The Mexican peso inched up 0.2% against the dollar, but eyed its seventh straight week of losses, hit by expectations of a narrowing of the US-Mexico interest rate differential and uncertainty over the USMCA free trade deal.

Data showed the region's second largest economy grew more than expected in August from the prior month, with all three main sectors posting gains, official data showed.

Elsewhere, Venezuelans took to the streets on Thursday in the first nationwide opposition protest in nearly two years, as demonstrators demanded free elections and other political changes, with a notably thin presence of security forces.

The country's legacy international maturities were marginally higher.

Meanwhile, US first lady Melania Trump secured a ceasefire between Russia and Ukraine in the Russian-controlled city of Oleshky, which will begin on October 29, the White House said.

Kyiv's hard currency bonds , gained over a cent following the news.

Key Latin American stock indexes and currencies: