Brazilian shares edge higher, helped by financials

SAO PAULO, Nov 3 (Reuters) -- Brazilian shares edged up slightly on Tuesday, as gains in financial stocks driven by stronger-than-expected results from major bank Itau Unibanco offset sagging metal company shares.

Sao Paulo's Bovespa index .BVSP rose 0.2 percent to 61,669 points in choppy trading, following a 3.4 percent tumble during trading last Friday before a holiday on Monday. The index is still up 64 percent from the beginning of 2009.

World stocks hit a four-week low on Tuesday as poor results from UBS UBSN.VS and a shake-up of UK banks Lloyds (LLOY.L) and Royal Bank of Scotland (RBS.L) prompted investors to cut back on risk.

Reduced appetite for risk also put pressure on the country's currency, with Brazil's real BRBY dipping 0.4 percent to trade at 1.763 per U.S. dollar.

Among the best performers, Itau Unibanco (ITUB4.SA) (ITUB.N), Brazil's largest private-sector bank by assets, rallied 2.9 percent to 34.45 reais after it posted an unexpected increase in third-quarter profits of $1.53 billion. For more see [ID:nL3573578].

Elsewhere in the financial sector, Banco Bradesco (BBDC4.SA) rose 1.39 percent to 35.04 reais and Banco do Brasil (BBAS3.SA) gained 1.91 percent to 28.75 reais.

"(The Bovespa) has reached a high level and investors are taking profits and waiting for news about the global economy," said Rodrigo Bresser Pereira at Bresser Fund Management.

Flows into Brazil's financial markets reached such levels in recent months that the government decided in October to start charging a 2 percent tax on inflows into the stock and currency markets.

Steelmakers fell along with the broader world metal prices. Usiminas (USIM5.SA) shed 1.67 percent to 45.23 reais and CSN (CSNA3.SA) fell 1.9 percent to 57.19.

Plane maker Embraer (EMBR3.SA) fell 2.68 percent to 8.70 reais, after Bank of America Merrill Lynch analysts said in a report the company is braced for a few quarters of weak profit margins and icnreasing competitive pressures. See [ID:nN03483926].

Yields on Brazilian interest rate futures contracts were broadly lower. The central bank is widely expected to keep interest rates on hold for the rest of the year at a record-low of 8.75 percent. (Reporting by Peter Murphy; Editing by Ana Nicolaci da Costa and xx )