LONDON, Dec 18 (Reuters) - Brazil's real struggled to

claw back some of its hefty losses on Wednesday and the cost of

insuring exposure to its debt lingered near a 14-month high with

markets febrile as Latin America's largest economy faces a

deepening financial crisis.

Brazilian assets from stocks to bonds and its currency have

found themselves in the crosshairs of investors, who have been

doubtful whether lawmakers would be able to pass the main part

of a fiscal bill aimed at putting government finances on a more

sustainable footing.

The lower house of Congress late on Tuesday approved the

main text of a bill but has yet to vote on some amendments

proposed by lawmakers.

The real slipped 0.7% to 6.14 cents from Tuesday's close,

struggling to stay off the record weak point of 6.2092 it had

hit on Tuesday, LSEG data showed. The currency has weakened more

than 20% since the start of the year.

Five-year credit default swaps, reflecting the risk of

default for a country on its debt, stood at 188 basis points,

according to S&P Global Market Intelligence. The swaps had

broken above the 190 bps level on Tuesday, the highest since

October 2023.

The dollar-denominated MSCI Brazil index has fallen more

than 30% since the start of the year.

"The core problem is a perennial one: the government does

not have a convincing policy to rein in the primary fiscal

deficit and reduce high gross government debt," said Hasnain

Malik at Tellimer.

Brazil's nominal budget deficit, including interest payments

on public debt, has climbed to 9.5% of GDP from 4.6% when

President Luiz Inacio Lula da Silva took office in January 2023.