UPDATE 1-Brazil inflation jumps more than fcast to mid-Nov

* Brazil's IPCA jumps more than forecast to mid-November

* Annual inflation falls further below government target

* Yields on interest rate futures surge on monthly data

(Recasts, adds interest rate futures, annual inflation)

SAO PAULO, Nov 26 (Reuters) - Inflation in Brazil quickened more than expected in the month to mid-October because of a widespread increase in prices of food, fuels and transportation, sending interest rate futures sharply higher.

The benchmark IPCA inflation index BRIPCA=ECI rose 0.44 percent in the month-long period through mid-November, up from a 0.18 percent gain in the month to mid-October, the government's statistics agency IBGE said on Thursday.

The index had been expected to rise 0.35 percent, according to the median forecast of 28 economists surveyed by Reuters. Estimates for the IPCA ranged from 0.30 percent to 0.38 percent.

Yields on interest rate futures contracts <0#DIJ:> surged after the release of the inflation data, with the contract for January 2011 DIJF1 delivery, the most widely traded at the BM&F Bovespa, up to 10.25 percent from 10.19 percent on Wednesday. The July 2010 contract DIJN0 firmed to 9.10 percent from 9.06 percent the previous session.

The central bank, which uses the IPCA index as a guide when setting interest rates, has a 4.5 percent annual inflation target for 2009 and 2010, plus-or-minus 2 percentage points.

In the 12 months to mid-November the index rose 4.09 percent, compared with 4.14 percent in the year to mid-October and 4.17 percent in the year through the end of October.

The so-called IPCA-15 tracks consumer prices from around the 15th of one month to the 15th of the next. The index also sets the value of tens of billions of dollars of Brazilian government bonds. (Reporting by Elzio Barreto and Rodrigo Viga Gaier; Editing by Matthew Jones)

((For details on Brazilian inflation by sector and regions, please go to: here)) ((elzio.barreto@thomsonreuters.com; +55 11 5644-7725; Reuters Messaging: elzio.barreto.reuters.com@reuters.net))