Brazil markets rally as euro debt risk recedes

SAO PAULO, March 29 (Reuters) - Brazilian stocks and the currency jumped on Monday as worries over a sovereign debt crisis in the euro region waned and further signs of an economic rebound in the United States fueled demand for riskier assets.

Steelmakers Usiminas (USIM5.SA) and CSN (CSNA3.SA) and mining giant Vale led gains in Sao Paulo's Bovespa index as metal prices and oil rose in global markets. The Reuters-Jefferies CRB index .CRB, a commodities benchmark, had on Monday the biggest intraday gain in six weeks.

The Bovespa .BVSP rose 0.7 percent to 69,175.34, the fourth gain in six sessions. The real BRBY, Brazil's currency, rose 1 percent to 1.811 to the dollar in late morning trading.

"Things are looking quite rosy in international markets today, with the Greece debt situation looking less risky, the United States posting healthy data readings," said Sidney Moura, an executive director with Sao Paulo-based NGO Cambio brokerage.

U.S. consumer spending rose in February for a fifth straight month [nN29246203]. Greece is selling seven-year bonds on Monday, days after euro region leaders and International Monetary Fund authorities vowed to help the country prevent its ballooning budget deficit from widening [nLDE62S0SD].

Investors in Brazil follow developments in global markets as a sign of risk-taking and global sentiment. Markets in Brazil, the world's third biggest food exporter, usually trade higher in days of rising commodity prices.

Crude oil CLc1 for May delivery rallied 2.4 percent to $81.92 a barrel in New York. Metals rallied, led by gold, copper and nickel.

Usiminas, Brazil's largest maker of flat steel, rose 2.9 percent to 58.50 reais, while CSN advanced 1.9 percent to 35.46 reais. Gerdau (GGBR4.SA), the largest steelmaker in the Americas with large mills in the United States, rallied 2.3 percent to 27.87 reais.

Vale's preferred shares (VALE5.SA), the company's most widely traded class of stock, gained 1 percent to 49.04 reais, the highest level since June 2008, as nickel and copper rose in international markets.

Petrobras' preferred shares (PETR4.SA), the Bovespa index's largest stock, rose 0.8 percent to 34.77 reais. Shares fell 2 percent on Friday after an executive said a stock issuance was possible to pay for massive capital expenditures plans this year.

CURRENCY

NGO's Moura said the real advanced after investors unwound bets on further declines against the U.S. dollar.

Traders said a recent rise in the dollar as a result of the euro debt crisis had turned some domestic trades in currency options into money losers. Some investors zeroed those positions late last week by buying futures contracts and spot dollars.

"It's hard to see the market trading at levels close to 1.75 to the dollar, the current trading range close to 1.8 is here to stay for a more prolonged period," he noted.

Yields on Brazilian interest rate future contracts <0#DIJ:> were mainly stable for the most widely traded maturities. The yield on the January 2011 DIJF1 contract, the market's benchmark, fell 1 basis point to 10.38 percent from Friday.

Investors use the rate contracts as a gauge of the level of the Selic at the end of each maturity.

The central bank said in a weekly survey with economists published on Monday that inflation expectations for this year rose for a 10th week. Despite that, investors judged that the yield curve is pricing next month's increase in borrowing costs -- the first in two years. (Reporting by Guillermo Parra-Bernal; Editing by Kenneth Barry)