Brazil stocks dip on profit-taking, real weaker

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SAO PAULO Oct 1 (Reuters) - Brazil's stocks closed lower on Thursday as investors booked profits on solid gains over the third quarter.

The benchmark Bovespa index .BVSP slid 1.72 percent to close at 60,459.33, a day after hitting its best close so far in 2009. The index had gained almost 9 percent in September and almost 20 percent in the third quarter.

"It's natural for the index to show some profit-taking in the short term," Andre Paes, a director at Infinity Asset Management. "But that doesn't alter in the slightest the medium- and long-term trajectories, which are for gains."

Those advances are expected because of strong interest from investors both abroad and in Brazil, he said, who are weighing Brazil's return to growth in the second quarter and stronger economic conditions compared to many countries still mired in recession.

Brazil's currency, the real BRBY, weakened 0.79 percent to 1.787 per dollar. The real's close on Wednesday was its best since Sept. 9, 2008.

The real has soared nearly 31 percent so far this year.

State-controlled energy giant Petrobras (PETR4.SA) sank 2.16 percent to 34.05 reais as crude oil CLc1 closed up slightly higher after choppy trading on a build in U.S. inventories.

Vale (VALE5.SA), the world's largest iron ore miner, dropped 2.54 percent to 35.67 reais. Deutsche Bank raised its price target for Vale to $23 from $18 on Thursday.

"Most operations are back at maximum capacity, investments are on budget and on schedule (likely increasing in 2010) and demand ex-China is also recovering," noted a report on Vale dated Wednesday from Merrill Lynch.

Petrobras and Vale are the two most heavily weighted stocks in the index.

Steelmakers also fell. Gerdau (GGBR4.SA) lost 2.69 percent to 23.11 reais, Usiminas (USIM5.SA) shed 1.86 percent to 45.84 reais and CSN (CSNA3.SA) declined 2.68 percent to 52.92 reais.

BM&FBovespa (BVMF3.SA), the world's fourth-largest exchange operator by market value, had limited losses in the morning but turned to negative territory as the day wore on. Those shares sank 1.38 percent to 12.88 reais.

Itau Securities included the stock among its top five picks for October, calling the shares "a way to capture the strong flow of public offerings forecast for the next months in the Bovespa."

The 19-commodity Reuters-Jefferies index .CRB tumbled 1.48 percent. The Bovespa index includes a number of stocks tied to commodities.

Yields on Brazilian interest rate futures contracts <0#DIJ:> ticked higher, particularly among shorter-term contracts.

The yield on the contract due January 2011 DIJF1 rose to 10.35 percent from 10.23 percent. The yield on the contract due July 2010 DIJN0 climbed to 9.24 percent from 9.2 percent.

The Brazilian central bank could raise its benchmark interest rate, the Selic, before the end of the year to prevent a spike in inflation, Brazilian newspaper Folha de S. Paulo reported on Thursday. [ID:nN01258479]

(Reporting by Luciana Lopez)