Brazil stocks rise on recovery hopes; real falls

SAO PAULO Aug 10 (Reuters) - Brazil stocks rose on Monday as the expectation of upbeat results from BM&F Bovespa boosted hopes for economic recovery, while investors looked forward to Chinese data for insight into commodities.

The benchmark Bovespa index .BVSP advanced 0.89 percent to 56,830.01 after choppy morning trading. The index has gained about 9 percent since July 15.

Brazil's currency, the real BRBY, weakened 1.32 percent to 1.849 reais per dollar. The currency has hovered near its strongest level since September in recent sessions.

Recent economic indicators, including a lower U.S. unemployment rate last week, have heartened investor hopes that a global economic crisis could be ending.

Data due later in the week could give a clearer picture for Brazil's economy in coming months, as China releases July commodity and energy trade data on Tuesday.

China is both a major consumer of Brazilian exports and widely seen as a potential engine to jump-start the still-flagging world economy.

"Anything to do with China will affect our index," said Raffi Dokuzian, of Banif Corretora, noting the close linkages between many Bovespa stocks and commodities. The 19-commodity Reuters-Jefferies index .CRB dipped 0.07 percent on Monday.

Noting the real's 8.5 percent gain over the past month, HSBC said in a report dated Monday that the real "looks poised for some near-term consolidation. ... But in the medium-term, we maintain our bullish outlook on expectations of strong capital inflows and signs of rapid recovery."

State-controlled energy giant Petrobras (PETR4.SA) added 0.31 percent to 32.10 reais. Crude oil CLc1 fell 0.47 percent, pressured by profit-taking in U.S. equities and oversupply worries.

Mining company Vale (VALE5.SA), the world's largest iron ore producer, inched up 0.12 percent to 33.07 reais.

Petrobras and Vale have the heaviest weighting in the index.

Leading gains was BM&F Bovespa (BVMF3.SA), the world's fourth-largest exchange operator by market value, which is expected to report higher second-quarter profits, according to a Reuters survey. [ID:nN10467299] The company is slated to report corporate earnings Tuesday night. On Monday its shares rose 2.76 percent to 12.28 reais.

Sugar producers gained after a monthly report from merchant Czarnikow said that current sugar supplies might not be enough to meet demand, as raw sugar futures continued at a 28-year peak and refined sugar hit an all-time high on Monday. [ID:nLA286447]

Cosan (CSAN3.SA) jumped 6.93 percent to 19.14 reais, and Acucar Guarani ACGU3.SA, which is not part of the Bovespa index, leapt 4.37 percent to 5.97 reais.

Yields on Brazilian interest rate futures contracts <0#DIJ:> mostly slid. The yield on the contract due January 2011 DIJF1 slipped to 9.86 percent from 9.87 percent. The yield on the contract due January 2010 DIJF0 dipped to 8.66 percent from 8.67 percent. The two contracts were among the most highly traded of the day.

The benchmark interest rate in Brazil currently stands at a record-low 8.75 percent. Bulltick Capital Markets expects that rate to last for the moment, senior strategist Kathryn Rooney said in a note.

"Contrary to market expectations (as priced in by local rates), we do not expect (the central bank) to raise rates back to double digits through 2011," she wrote, "but rather maintain the Selic at a record low through next year as the economy regains its traction." (Reporting by Luciana Lopez; Editing by Leslie Adler)