UPDATE 1-Brazil M&As seen up 30-40 pct as economy expands

* M&A deals seen gaining steam as growth accelerates

* Agribusiness, retail, finance seen leading takeovers

* Clogged IPO market could pave way for more M&A (Recasts to add byline, context, deals, banker comments)

By Elzio Barreto

SAO PAULO, Feb 11 (Reuters) - Mergers and acquisitions in Brazil, Latin America's largest economy, should rise 30 percent to 40 percent this year as a buoyant consumer market and government steps to foster homegrown conglomerates increase the allure of corporate combinations, a top industry executive said on Thursday.

Takeovers, corporate restructurings and ventures will be more active in the agribusiness, finance and consumer retail sectors as Brazil's expansion gains momentum in the face of resilient household income and a credit boom.

Brazil's state development bank BNDES, the country's main source of long-term corporate lending, will be a leading source of funds for mergers and acquisitions, said Carolina Lacerda, who heads the mergers and acquisitions committee at the Brazilian Association of Financial and Capital Markets Firms, or Anbima.

"This year is looking to be a very good one. We've had some large deals already in these initial months," she said at an event in Sao Paulo.

After a stellar year for share sales in Brazil, which housed two of the world's three largest initial public offerings in 2009, mergers and acquisitions activity is expected to grow as companies seek to consolidate their operations or block rivals from expanding.

In 2009, the volume of announced M&A was 150.6 billion reais ($81 billion), down about 32 percent from 220.3 billion reais in 2008.

Some of those transactions have had the blessing of Brazil's government, which wants to create Brazilian conglomerates with global clout.

The largest announced deal so far in 2010 is the $21 billion-a-year tie-up between sugar and ethanol producer Cosan (CSAN3.SA) and Royal Dutch Shell Plc (RDSa.L), which fits into Brazil's goal of making ethanol a global commodity by using Shell's global fuel distribution and retail system.

Cement giants Votorantim and Camargo Correa have bought stakes in Portuguese rival Cimpor (CPR.LS). Steelmaking and iron-ore conglomerate CSN (CSNA3.SA) bid for control of Cimpor late last year.

LEAGUE TABLE

In addition, companies are willing to take advantage of rules that expire later in the year awarding acquirers large tax credits, Lacerda said.

Some analysts including Cleveland Praxes of Fundacao Getulio Vargas have said that IPO deals are losing momentum and, with valuations of target companies on the rise, the time may have come for acquirers to arrange combinations.

Yet, multinational companies might also step in, in order to spark additional growth amid the deepest global economic recession since the 1930s, she added.

Credit Suisse arranged most M&A deals last year in Brazil, managing a combined 44.6 billion reais worth of transactions, Anbima said.

JPMorgan Chase (JPM.N) was second, with 40.5 billion reais worth of deals. The investment-banking unit of Banco Bradesco (BBDC4.SA)(BBD.N), Brazil's second largest non-government lender, advised on 40.1 billion reais in M&A deals.

(Additional reporting by Guillermo Parra-Bernal in Sao Paulo; Editing by Bernard Orr)