Brazil stocks jump on stimuli hopes, real stronger

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SAO PAULO Nov 9 (Reuters) - Brazilian stocks surged on Monday as a pledge by G20 nations to keep fiscal and monetary stimuli in place heartened investors.

At the weekend G20 finance ministers and central bankers agreed to keep up recession-fighting measures until economic recovery is assured. [ID:nL7204184].

"For the markets, that means the following: There's liquidity around, so let's use it," said Newton Rosa, an economist with SulAmerica Investimentos. "That's feeding today's highs."

Brazil's benchmark Bovespa index .BVSP rose 2.71 percent to 66,214.34, notching its best close in three weeks.

Brazil's currency, the real BRBY, strengthened 0.99 percent to 1.702 per dollar, testing the psychologically significant 1.7-per-dollar barrier as the greenback weakened against a basket of major currencies .DXY.

The real's gains are "not really a testament to the strength of the Brazilian economy but the weakness of the U.S. dollar," said Kathy Lien, director of currency research at GFT Forex. "Overall you are seeing another fresh wave of dollar weakness."

The currency has gained about 37 percent so far in 2009 as dollars have poured into Brazil, where growth resumed in the second quarter ahead of many developed economies.

Commodities gained on the back of the weakened dollar, as well. The 19-commodity Reuters-Jefferies index .CRB rose 1.73 percent. Crude oil CLc1 added 2.58 percent, buoyed not only by the lower dollar but also the closure of U.S. oil and gas facilities in the path of Tropical Storm Ida. [ID:nN09484512]

The gains in commodities boosted heavyweight Brazilian stocks, including Petrobras and Vale, the Bovespa index's most heavily-weighted stocks, which led gains.

State-controlled energy giant Petrobras (PETR4.SA) climbed 2.86 percent to 37.08 reais. Mining company Vale (VALE5.SA), the world's largest iron ore producer, advanced 3.34 percent to 43 reais.

Steelmakers rose, as well. Gerdau (GGBR4.SA) moved up 3.05 percent to 28.05 reais, Usiminas (USIM5.SA) put on 3.31 percent to 49.38 reais and CSN (CSNA3.SA) gained 0.5 percent to 60 reais.

"We believe that current events, such as production cuts at (Chinese steelmaker) Baosteel, rising iron ore spot prices and rumors about restructuring of the steel sector in China are supportive of our positive view on the sector," noted a report from Deutsche Bank analyst Rodrigo Barros dated Monday.

Banks performed strongly on Monday, Itau Unibanco (ITUB4.SA), Brazil's largest private-sector bank by assets, added 2.22 percent to 37.35 reais, Bradesco (BBDC4.SA) gained 1.46 percent to 35.50 reais and state-controlled Banco do Brasil (BBAS3.SA), Latin America's largest bank by assets, rose 4.22 percent to 30.90 reais.

Changes in yields on Brazilian interest rate futures contracts were mixed <0#DIJ:>, with most contracts remaining flat or ticking up slightly.

Investors use the contracts to bet on future trends in the Brazilian benchmark interest rate, the Selic, currently at a record-low 8.75 percent. (Reporting by Luciana Lopez; Editing by Andrew Hay)