Brazil stocks drop on commodities drag; real falls

SAO PAULO, Sept 2 (Reuters) - Brazil's stocks fell on Tuesday as a decline in oil and industrial metals prices dragged on shares of state-run Petrobras, mining company Vale and local steelmakers.

The Bovespa index .BVSP of the Sao Paulo Stock Exchange fell 1.37 percent to 54,404.41, dropping for a third session.

Brazil's real BRBY weakened 0.97 percent to 1.663 per U.S. dollar, tracking the greenback's rally that pushed it to a 10-month high against a basket of currencies. The slump in oil prices and industrial metals lessened expectations of dollar inflows to Brazil from exports, also pressuring the real.

"Today it's directly related to the market abroad," said Marcelo Voss, chief economist at the Liquidez brokerage. "The dollar is rising strongly as commodities drop and it is gaining against major currencies and those in emerging markets."

Interest-rate futures <0#DIJ:> on the BM&F commodities and futures exchange were mostly higher after government data showed industrial production in July rose more than expected. The industry figures may add to pressure on the central bank to keep boosting benchmark lending rates to cool the economy even as inflation pressures eased the past months.

Petrobras (PETR4.SA) fell 3.22 percent to 33.11 reais as crude oil prices fell sharply after reports that Hurricane Gustav had spared major U.S. Gulf oil facilities.

Mining giant Vale (VALE5.SA) dropped 1.63 percent to 36.89 reais as copper prices fell to a seven-month low as the dollar rallied and investors worried about demand for industrial metals.

Brazilian steelmakers also fell, on concern weaker metals demand may limit the companies' ability to raise prices. Usiminas (USIM5.SA) lost 6.33 percent to 53.30 reais, while CSN (CSNA3.SA) was down 5.79 percent to 53.7 reais and Gerdau (GGBR4.SA) fell 2.62 percent to 29.35 reais.

A slide in crude oil prices eased concern of higher fuel costs that could hurt the airlines' profits. TAM Linhas Aereas (TAMM4.SA), Brazil's biggest airline, jumped 4.64 percent to 33.80 reais.

(Reporting by Elzio Barreto and Fabio Gehrke)