Brazilian stocks close up on choppy day, real dips

(Updates to close)

SAO PAULO Jan 5 (Reuters) - Brazilian stocks closed higher on Tuesday after seesawing through much of the session.

The benchmark Bovespa index .BVSP ended the day 0.28 percent higher at 70,239.81, a day after closing above 70,000 for the first time since June 5, 2008.

Tuesday's close marked the seventh straight session of gains for the index, which closed 2009 almost 83 percent higher.

Brazil's currency, the real BRBY, ended the day 0.64 percent weaker at 1.732 per dollar.

"The optimism continues," said Daniel Marques, an analyst with Agora Corretora.

But given the index's run of gains, he noted, there remains space for light profit-taking and for stocks to pause.

"As long as it doesn't go below 66,000 points, there's no problem," he said, adding that the index could nevertheless reach about 71,200 points in the short-term.

Leading gains were shares of mining company Vale (VALE5.SA), the index's second most heavily weighted stock, which added 1.4 percent to 44.13 reais.

Steelmakers rose, as well. Usiminas (USIM5.SA) advanced 0.29 percent to 51.15 reais, Gerdau (GGBR4.SA) moved up 1.69 percent to 30.10 reais and CSN (CSNA3.SA) gained 0.93 percent to 56.73 reais.

"(We) believe Brazilian (iron ore) exports could increase at least 20 percent in 2010," according to a report from Bank of America Merrill Lynch on Monday. The report also reiterated a "buy" rating on both Vale and CSN.

Shares of wireless carrier TIM Participacoes TCSL3.SA jumped 7.24 percent to 7.70 reais. The company concluded its acquisition of operator Intelig at the end of December.

"Although largely expected by the market, we believe this is positive news for TIM," a note from Itau Securities said, citing the potential for reductions in TIM's infrastructure costs and the potential for bundled offers.

Limiting gains were shares of state-controlled energy giant Petrobras (PETR4.SA), the index's most heavily weighted stock, which slipped 0.86 percent to 37 reais.

Newspaper reports said Petrobras is negotiating to buy a stake in Portuguese oil company Galp (GALP.LS). For details see [ID:nLDE60418E]

Retailers notched some of the biggest percentage losses in the index on Tuesday. Lojas Americanas (LAME4.SA) slipped 3.49 percent to 15.20 reais, Lojas Renner (LREN3.SA) dipped 3.6 percent to 38.80 reais and Grupo Pao de Acucar PCAR5.SA, Brazil's largest retail conglomerate, lost 1.5 percent to 64.44 reais.

Yields on Brazilian interest rate futures contracts <0#DIJ:> broadly fell.

The yield on the contract due January 2011 DIJF1 slid to 10.42 percent from 10.46 percent. The yield on the contract due July 2010 DIJN0 edged down to 9.17 percent from 9.18 percent.

Both were among the most active contracts of the day.

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