Brazil stocks rise, real inches down in light trade

(Updates to close)

SAO PAULO Dec 29 (Reuters) - Brazilian stocks edged higher in light trading on Tuesday as investors proved wary of taking new positions on the penultimate session of the year in Latin America's largest economy.

The benchmark Bovespa index .BVSP closed the session 0.58 percent higher to 68,296.04 points, notching its fourth straight session of gains on slim volume.

"At this time of year, liquidity dries up considerably," said Adriano Moreno, a strategist with Futura Investimentos.

Tuesday's close brought the index's year-to-date gains to nearly 82 percent, marking Brazil as an investor darling and a 2009 highlight among emerging markets.

The gains in equities came as part of Brazil's resilience in in the face of the global economic crisis, leaving a six-month recession in the second quarter, well ahead of many developed economies.

Currency trading also saw light volumes.

This close to year-end, most investors have already reconfigured their portfolios, said Julio Martins, a fund manager with Adinvest in Rio de Janeiro.

Brazil's currency, the real BRBY, ended the day near flat, weakening 0.06 percent to 1.743 per dollar as the greenback gained against a basket of major currencies .DXY and hit a two-month high against the yen.

Among stocks on Tuesday, banks largely advanced. Itau Unibanco (ITUB4.SA), Brazil's largest private sector bank, led gains, climbing 1.87 percent to 38.61 reais, and Bradesco (BBDC4.SA) rose 0.72 percent to 36.30 reais.

Central bank data showed that November bank lending in Brazil jumped 5.1 percent, the fastest pace in three months, as the default rate stayed stable from October. [ID:nN29185781]

The index's two biggest stocks, state-controlled energy giant Petrobras and mining company Vale, also moved up, albeit incrementally.

Petrobras (PETR4.SA) shares rose 0.14 percent to 36.80 reais, nearly mirroring the 0.13 percent rise in New York-traded crude oil futures CLc1.

Vale (VALE5.SA), the world's largest producer of iron ore, ended nearly unchanged, edging up 0.02 percent to 42.40 reais.

Steelmakers also climbed. Usiminas (USIM5.SA) rose 1.97 percent to 49.76 reais, Gerdau (GGBR4.SA) added 0.55 percent to 29.31 reais and CSN (CSNA3.SA) added 0.6 percent to 55.23 reais.

Yields on Brazilian interest rate futures contracts were mixed <0#DIJ:>, with a number of contracts dipping.

Investors use the contracts to bet on trends in Brazil's benchmark interest rate, the Selic, currently at a record-low 8.75 percent.

Policymakers use an inflation target, currently at 4.5 percent plus or minus two percentage points, to guide rates.

Data on Tuesday showed that Brazil's broadest inflation index dropped more than expected in December, its first annual decline in almost 20 years. [ID:nN29181333]