Brazil stocks rise on risk appetite, real stronger

SAO PAULO Dec 3 (Reuters) - Brazilian stocks rose in early trading on Thursday, as a year-end rise in the appetite for riskier assets led investors to emerging market stocks.

The benchmark Bovespa index .BVSP added 1.01 percent to 69,307.97 in morning trading, on track to notch a third straight session of gains. The index has not been above the 70,000-point mark since June 2008.

Brazil's currency, the real BRBY, strengthened 0.81 percent to 1.709 per dollar, testing the psychologically key 1.7-per-dollar mark.

"The market is rallying somewhat at the end of the year," said Jose Simao of Sao Paulo-based InTrader. "There was a shadow of doubt cast last week after the Dubai news, but with the possibility of restructuring (of that debt), for now things have some support."

But Simao noted the importance of U.S. payroll numbers due for release on Friday. If those numbers come in far under expectations, investors could be shaken, he said.

Last week the possibility of a debt default by a Dubai-controlled investment holding company gave investors cold feet.

But news this week of upcoming talks between Dubai World and its main creditors to restructure the company's $26 billion of debt brought some reassurance. [ID:nGEE5B114H]

Among Brazilian stocks, state-controlled energy giant Petrobras (PETR4.SA) and mining company Vale (VALE5.SA) led gains in the Bovespa index.

Petrobras advanced 1.27 percent to 39.91 reais as crude oil CLc1 rose 0.56 percent with the dollar seesawing against a basket of major currencies .DXY.

Vale, the world's largest producer of iron ore, rose 0.85 percent to 42.87 reais.

Steelmakers and banks also helped pull the Bovespa index higher.

Among the former, Gerdau (GGBR4.SA) climbed 2.45 percent to 29.31 reais, Usiminas (USIM5.SA) added 0.87 percent to 52.10 reais and CSN (CSNA3.SA) moved up 0.78 percent to 61.05 reais.

Brazil's crude steel output is forecast to rise 24 percent next year, Brazilian Steel Institute said on Wednesday, with exports up 16 percent in 2010. [ID:nN0211352]

Among banks, Itau Unibanco (ITUB4.SA), Brazil's largest private-sector bank by assets, rose 0.58 percent to 40.03 reais, Banco do Brasil (BBAS3.SA), Latin America's largest bank by assets, gained 1.68 percent to 30.91 reais and Bradesco (BBDC4.SA) climbed 0.91 percent to 37.59 reais.

Changes in yields on Brazilian interest rate futures contracts <0#DIJ:> were mixed, with a number of contracts remaining flat.

The yield on the contract due January 2011 DIJF1 inched to 10.37 percent from 10.35 percent. The yield on the contract due July 2011 DIJN1 edged to 11.3 percent from 11.29 percent.

Both were among the morning's most highly-traded contracts.

Investors use the contracts to bet on trends in the country's benchmark interest rate, the Selic, currently at a record-low 8.75 percent. (Reporting by Luciana Lopez; Editing by Theodore d'Afflisio) ((luciana.f.lopez@thomsonreuters.com; Reuters Messaging: luciana.f.lopez.thomsonreuters.com@reuters.net; Tel: +5511-5644-7756))