EMERGING MARKETS-Brazil's real feels political pain, Petrobras rallies

* C.Suisse sees Brazil Selic rate ending 2021 at 8.25% * Petrobras surges after Q2 earnings top estimates * Peru's Francke aims for fiscal deficit under 5.4% of GDP * Foreign miners in Chile warn lawmakers over royalties (Adds graphic, updates prices) By Susan Mathew and Ambar Warrick Aug 5 (Reuters) - Political uncertainty dragged Brazil's real lower on Thursday, despite an initial central bank boost, while shares of oil major Petrobras rose more than 8% on strong quarterly results. The real fell 0.7% after hundreds of business leaders published a letter in an apparent rebuke to President Jair Bolsonaro's recent threats to elections in 2022. Bolsonaro also hit out at a Supreme Court investigation into his conduct and threatened to respond outside the limits of the constitution, a move that could have serious ramifications for Latin America's largest economy. Growing discontent with Bolsonaro's administration and a series of corruption scandals have clouded the outlook for Brazilian assets this year, despite a pickup in economic growth. The real had initially taken support from the central bank's latest move to hike rates by 100 basis points to 5.25%. A Reuters poll shows the currency is expected to hold on to these levels in the coming months. "We are revising our expectation of one hike of 100 basis points in September followed by two consecutive hikes of 50 basis points ... increasing the Selic interest rate to 8.25% by year-end 2021," said Credit Suisse analysts Solange Srour and Lucas Vilela. Political uncertainty pulled the Bovespa stock index off its early gains. But Petrobras was set for its best day in more than five months after beating second quarter profit estimates on higher Brent prices, strong natural gas sales and relatively controlled expenses. Most other regional stock benchmarks tracked Wall Street, which was lifted by lower weekly U.S. jobless claims. MSCI's index of Latam stocks fell 0.1%, but fared better than a broader index of emerging market stocks that was dented by hawkish comments from a top U.S. Federal Reserve official on Wednesday. Gains in Peru's sol were hampered by a dip in copper prices. Newly-appointed moderate Finance Minister Pedro Francke on Wednesday said he hopes to keep Peru's fiscal deficit for 2021 below a previously established limit of 5.4% of GDP, even as a new administration pushes to raise spending. Copper exporter Chile's peso fell 0.7% towards October lows. Foreign miners asked lawmakers to rewrite a bill that would slap royalties on their sales, saying it could damage their competitiveness and investment plans. Key Latin American stock indexes and currencies: Latest Daily % change MSCI Emerging Markets 1299.10 -0.38 MSCI LatAm 2482.74 -0.24 Brazil Bovespa 121545.88 -0.21 Mexico IPC 51176.20 -0.04 Chile IPSA 4228.73 0.41 Argentina MerVal 65855.39 1.179 Colombia COLCAP 1231.29 -0.77 Currencies Latest Daily % change Brazil real 5.2224 -0.65 Mexico peso 19.9258 0.27 Chile peso 779.29 -0.69 Colombia peso 3914 -0.38 Peru sol 4.0665 0.19 Argentina peso 96.8800 -0.04 (interbank) (Reporting by Susan Mathew and Ambar Warrick in Bengaluru; Editing by Will Dunham and Alexander Smith)