Brazil stocks in choppy trade as caution lingers

SAO PAULO Feb 3 (Reuters) - Brazilian stocks seesawed in early trade on Wednesday, as investor caution lingered on doubts over the global economic recovery and ahead of key data slated for release later in the week.

The benchmark Bovespa index .BVSP edged down 0.25 percent to 66,994.861 near mid-day after dipping in and out of positive territory.

While private-sector employment data from the United States signaled an economic recovery could be coalescing, lingering doubts over a fiscal crisis in Greece offset some optimism, said Marianna Costa, an economist with Link Investimentos in Sao Paulo.

"Deep down, the scenario still isn't really calm," she said. The worries over Greece are "a problem that will probably get worse before improving."

More indicative of a possible U.S. recovery, she said, will be U.S. Labor Department jobs numbers, due Friday. The January non-farm payrolls government report, which is forecast to show a gain of 5,000 jobs from December, will be closely watched for broad indications about the health of the U.S. economy.

Brazil's currency, the real BRBY, weakened 0.6 percent to 1.841 per dollar as the greenback edged up 0.2 percent against a basket of major currencies .DXY.

Among Brazilian stocks, heavyweights Vale and Petrobras led losses.

Mining giant Vale (VALE5.SA), the world's largest producer of iron ore, dropped 0.69 percent to 43.36 reais.

State-controlled energy company Petrobras (PETR4.SA) shed 0.73 percent to 33.85 reais as crude oil CLc1 traded flat ahead of key inventory data.

Shares of Grupo Pao de Acucar PCAR5.SA, Brazil's largest retailer, fell 0.84 percent to 64.74 reais after Valor Economico newspaper reported that regulators are considering imposing restrictions on the company's purchase of rivals Globex Utilidades and Casas Bahia.

The newspaper did not say how it obtained the information but added the decision would prevent Pao de Acucar from closing stores and revamping the operations of both Casas and Globex.

Brazilian banks gave up some of their gains of the previous session. Itau Unibanco (ITUB4.SA), the country's largest private-sector bank by assets, moved down 0.16 percent to 37.24 reais. Bradesco (BBDC4.SA) slid 0.25 percent to 32.27 reais. Banco do Brasil (BBAS3.SA), Latin America's largest bank by assets, lost 1.96 percent to 30 reais.

Brazilian oil start-up OGX (OGXP3.SA) helped limit losses, gaining on 3.07 percent to 18.45 reais. The company on Wednesday estimated recoverable oil reserves from its OGX-3 well at 500 million to 900 million barrels. For details see [ID:nSAS000050]

Yields on Brazilian interest rate futures contracts <0#DIJ:> inched higher the day before minutes from the central bank's most recent meeting are due.

The yield on the contract due January 2011 DIJF1 edged to 10.37 percent from 10.35 percent. The yield on the contract due January 2012 DIJF2 stayed flat at 11.6 percent.

Both were among the morning's most active contracts.

Last week policymakers held Brazil's benchmark interest rate, the Selic, at a record-low 8.75 percent, but gave indications that their next steps would depend on the evolving macroeconomic scenario.

The minutes from that meeting are scheduled for release Thursday morning, and the document will be scoured by investors looking for clues about when a tightening cycle could begin. (Reporting by Luciana Lopez; Additional reporting by Guillermo Parra-Bernal; Editing by Padraic Cassidy)