Brazil currency slids from 11-month high

SAO PAULO Aug 4 (Reuters) - Brazil's currency weakened on Tuesday, falling from its highest level in almost 11 months, as uncertainty over the extent of a global economic recovery and profit-taking led investors to sell government bonds and other instruments.

The real BRBY slid 0.2 percent to 1.838 reais to the dollar in late morning trading. It reached on Monday the level of 1.834 reais, its best since September 25.

The Bovespa index .BVSP, Brazil's benchmark stock index, reversed earlier losses and rose 0.6 percent to 56,310.96 in tandem with U.S. equities. Economic data in the United States showed pending sales of previously owned homes rose at a faster-than-expected pace in June.

U.S. housing data has improved recently but the labor market remains strained.

"The data is coming mixed and the local markets will mainly improve if data from abroad turns out better," said Jose Simao, a senior trader with brokerage Intrader in Sao Paulo.

The Bovespa reached today its highest level since last August.

IDEAGlobal, a New York-based economic research firm, said in a note to clients that fluctuations in the real would be likely although the currency would probably strengthen as Brazil's economy emerges from recession faster than other major economies.

"There is optimism that the economy will probably contract less than expected," Simao said.

More than $3 billion entered Brazil in the form of investment inflows last month, forcing the central bank to buy dollars to ease volatility.

Most of the inflows come from investors eager to tap the debt and stock markets -- the Bovespa has risen more than 50 percent this year and about $10 billion have been sold in share offerings since the start of the year.

Vale (VALE5.SA) led gains in the Bovespa, advancing 0.8 percent to 33.3 reais.

ALL Logistica ALLL11.SA, Latin America's largest railroad operator, rose for a fifth day, adding 4.2 percent to 13.04 reais. The company closed a contract with Usiminas (USIM5.SA) to transport up to 30,000 tonnes of steel products per month from the Brazilian Southeast region to the south.

Cyrela (CYRE3.SA), Brazil's biggest real estate developer, rose 2.6 percent to 20.23 reais. Simao said investors will now focus on the housing industry as the credit crunch is beginning to ease and the government spurs housing with a $18 billion plan.

The yield on the interest rate futures contract due in January 2011 DIJF1 inched up to 9.85 percent from 9.84 percent. The yield reflects expectations for the level of the benchmark interest rate, the Selic, by the end of 2010.

(Reporting by Guillermo Parra-Bernal; Editing by Andrea Ricci)