Brazil stocks higher on US GDP; currency near flat

SAO PAULO Jan 29 (Reuters) - Brazilian stocks rose in early trading on Friday, as U.S. economic growth data buoyed investor optimism about the strength of the global recovery.

The benchmark Bovespa index .BVSP rose 1.3 percent to 66,442.95, on track for a second session of gains.

The government said the U.S. economy grew 5.7 percent in the fourth quarter, beating forecasts and underscoring a recovery in the world's largest economy. For details, see [ID:nCAT005061].

Analysts, in a Reuters survey, looked for fourth-quarter U.S. GDP hitting 4.6 percent, up from 2.2 percent in the third quarter. [ID:nN28246399]

The news boosted equities both in Brazil and in the United States, where stock index futures rose sharply on the data. [ID:nN29221763]

In addition, the U.S. Senate confirmation of Ben Bernanke as chairman of the U.S. Federal Reserve on Thursday, despite grumblings about his performance, also calmed investors. [ID:nN27143856]

"He's already well experienced in handling a crisis," said Joao Pedro Brugger, an analyst with Leme Investimentos. Bernanke, he added, is a known entity among investors.

Reassurances from Europe that Greece would not default helped ease fears the country might default on its debt. The concerns have cast a pall over markets in recent weeks. [ID:nLDE60S0XN]

Among Brazilian stocks, heavyweights Vale and Petrobras led gains.

Mining company Vale (VALE5.SA), the world's largest producer of iron ore, added 1.9 percent to 42.95 reais. Vale said late Thursday it signed a contract with fertilizer company Yara to buy its stakes in Fosfertil FFTL4.SA and Fertifos, one day after announcing the purchase of Bunge Ltd's (BG.N) fertilizer assets in Brazil. [ID:nN29130110]

State-controlled energy giant Petrobras (PETR4.SA) rose 1.04 percent to 34.97 reais, as crude oil futures CLc1 climbed 1 percent.

Jumping as much as 11 percent in the morning, utility Cesp (CESP6.SA) leaped 8.46 percent to 24.62 reais near midday on talk the government could renew concessions for electric utilities. [ID:nN29216356]

Also gaining were steelmakers. Gerdau (GGBR4.SA) moved up 2.11 percent to 26.14 reais, Usiminas (USIM5.SA) climbed 1.85 percent to 49.55 reais, and CSN (CSNA3.SA) advanced 1.99 percent to 55.37 reais.

Brazil's currency, the real BRBY, dipped 0.05 percent to 1.867 per dollar.

The real jumped about 34 percent against the dollar in 2009, worrying the government and exporters. But so far this year, the currency has weakened 6.6 percent.

Brazilian Finance Minister Guido Mantega said in Davos on Friday he was happy with real weakness so far this year, but that the currency has not yet reached equilibrium. [ID:nLDE60S1L0]

Changes in yields on Brazilian interest rate futures contracts <0#DIJ:> were mixed, with yields on some falling.

The yield on the contract due January 2011 DIJF1 edged down to 10.31 percent from 10.34 percent. The yield on the contract due January 2012 DIJF2 edged off to 11.71 percent from 11.75 percent.

Investors use the contracts to bet on trends in the country's benchmark interest rate, the Selic, which policymakers held at a record low 8.75 percent late on Wednesday.

Mantega also said Friday the country's inflation is under control.

The central bank uses an inflation target, pegged in 2010 at 4.5 percent, plus or minus 2 percentage points, as a guide in setting interest rates. (Reporting by Luciana Lopez; editing by Jeffrey Benkoe)