Brazil stocks, currency rise after large rate cut

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SAO PAULO, March 12 (Reuters) - Brazil's stocks firmed on Thursday, tracking a sharp rise on Wall Street, while hopes that the economy will pick up steam after a sharp interest rate cut in the previous session lifted the country's currency.

Sao Paulo's main stock index, the Bovespa .BVSP, rose 0.89 percent to 39,151.86 in choppy trade, led by gains in heavyweight state-run oil major Petrobras.

U.S. stocks .DJI gained on relief S&P did not cut General Electric's credit ratings by more, while an only modest fall in U.S. retail sales last month seemed to provide some comfort and increase appetite for riskier assets.

A report showed U.S. retail sales slipped 0.1 percent in February, an unexpectedly small drop and a rare dose of good news for an economy trapped in a recession.

Brazil's central bank slashed interest rates on Wednesday by 1.5 percentage points, the largest rate cut in more than five years, in a bid to prevent Latin America's largest economy from slipping into recession.

The move helped boost the real BRBY by more than 2 percent to 2.301 per dollar on Thursday on the view that lower rates will help Latin America's largest economy regain steam.

On the stock market, Petrobras (PETR4.SA) was the biggest weighted gainer, up 1.25 percent at 27.55 reais as oil prices jumped more than 10 percent.

Financials also rose, with Itau ITAU4.SA, Banco Bradesco (BBDC4.SA), and Unibanco UBBR11.SA up between 2.6 and 2.8 percent.

Interest rate futures <0#DIJ:> were broadly lower, showing investors are expecting the Selic rate to fall further, even though the central bank refrained on Wednesday from committing to any more monetary policy easing. (Reporting by Ana Nicolaci da Costa; Editing by James Dalgleish)