Brazil markets higher on risk appetite; real gains

(Updates to close)

SAO PAULO, Brazil, Sept 16 (Reuters) - Brazilian stocks hit their highest close in more than a year on Wednesday as hopes that a global economic recovery is consolidating whetted investor appetite for riskier emerging market assets.

The benchmark Bovespa index .BVSP jumped 1.94 percent to 60,410.66, closing above 60,000 for the first time since July 21, 2008. The index has risen eight of the last nine sessions.

Brazil's currency, the real BRBY, strengthened 0.4 percent to 1.8 per dollar, its strongest mark since Sept. 22, 2008.

Comments by U.S. Federal Reserve Chairman Ben Bernanke on Tuesday that the recession was probably over in the United States continued to add to snowballing optimism in Brazil.

"Bernanke's talk fed hopes that the recovery is going to be a little more consistent now," said Carlos Camacho, a fund manager with GAP Asset Management.

Data on Wednesday also showed that Brazil's economy had the biggest jump in payroll jobs on record in August, adding to hopes of a strong, swift recovery here [ID:nN16457132].

Though prices in the Brazilian markets are now near their targets, considering the nearly 61 percent of gains in the Bovespa this year, investors remain drawn to the index by the idea that it could go yet further, Camacho said.

"Brazilian investors don't think prices are cheap, but they don't think they're expensive, either," Camacho said.

The real's gains came on the back of strong dollar inflows. In addition, the dollar sank against a basket of other major currencies .DXY for the second straight day.

The dollar is considered a safe-haven currency, so when investors regain confidence in riskier, higher-yielding assets, they tend to move away from the U.S. currency.

The dollar "now trades in very strong correlation with risk," wrote Boris Schlossberg, director of currency research at GFT, in an e-mailed note.

U.S. Treasury data also showed a sharp net capital outflow from the United States in July, hurting the greenback. For more see [ID:nN16114656].

Dollar weakness helped commodities. The 19-commodity Reuters-Jefferies index .CRB advanced 1.84 percent. The Bovespa includes a number of stocks tied to commodities.

State-controlled energy giant Petrobras (PETR4.SA) added 2.84 percent to 34.35 reais. The stock was helped by a 2.23 percent rise in the price of crude oil CLc1 after government data showed that domestic crude inventories fell more than expected last week.

Mining company Vale (VALE5.SA), the world's largest producer of iron ore, climbed 1.46 percent to 35.35 reais. Petrobras and Vale have the heaviest weighting in the index.

Steelmakers also rose on recovery hopes. Gerdau (GGBR4.SA) added 3.52 percent to 23.85 reais, Usiminas (USIM5.SA) advanced 3.87 percent to 46.99 reais, and CSN (CSNA3.SA) gained 3.33 percent to 54.25 reais.

Shares of JBS (JBSS3.SA), the world's largest beef processor, jumped 8.81 percent to 8.65 reais. The company said on Wednesday that it would buy Brazilian rival Bertin. In addition, bankrupt U.S. chicken producer Pilgrim's Pride Corp PGPDQ.PK said it agreed to sell a 64 percent stake to JBS for $800 million. [ID:nN16119897]

Yields on Brazilian interest rate futures contracts <0#DIJ:> rose. The yield on the contract due January 2011 DIJF1 climbed to 9.88 percent from 9.72 percent. The yield on the contract due January 2012 DIJF2 shot to 11.23 percent from 11.04 percent. Both were among the most highly traded contracts of the day. (Reporting by Luciana Lopez; Editing by Leslie Adler)