EMERGING MARKETS-Brazil's real at 4-mth high as region gains

* Traders in Brazil get ready for tougher intervention

* Brazil's real firms 0.8 pct, Mexican peso gains 1.1 pct

* Market bets Brazil c. bank certain to hold interest rate

By Samantha Pearson

SAO PAULO, Sept 1 (Reuters) - The Brazilian real hit its strongest level in four months on Wednesday after manufacturing growth in China, Brazil's main trading partner, rebounded in August.

Optimism over Chinese demand for the Brazil and Latin American exports added to stronger U.S. manufacturing data for last month, giving investors more confidence to buy higher-risk assets. [ID:nTOE68001O]

The Brazilian real BRBY gained 0.8 percent to 1.741 reais per U.S. dollar on the local spot market, hitting its strongest intraday level since May 4.

But the currency's rally raised speculation that the central bank will step up its intervention in the market in an effort to protect exporters.

If the real holds below 1.75 for an extended period, the central bank might be forced to call multiple auctions in the spot market to buy dollars, analysts said.

The central bank has also indicated that it might offer so-called reverse swaps -- a form of a derivative that would allow the bank to effectively buy U.S. dollars in the futures market.

"Anything under 1.75 causes discomfort," said an economist at the BGC Liquidez brokerage in Sao Paulo. "We're going to find out if it causes the central bank to do anything or not,"

He said, however, the central bank might be unlikely to announce any big moves on Wednesday, at least in the futures market. Because the futures contract for the previous month expired on Tuesday, it was not yet clear how big investor positions were, possibly making the central bank more reluctant to act, he said.

The Mexican currency MXN= strengthened 1.1 percent to 13.053 per dollar, recovering from the three-month low it hit in the previous session.

The Chilean peso CLP= firmed 0.8 percent to 498.80 per dollar as the price of copper, the country's main export, rallied.

"The outlook abroad is still positive ... so for now, the peso is opening higher, also helped by the dollar's weakness against leading currencies," one trader in Santiago said.

BRAZIL LOOKS CERTAIN TO HOLD RATES

Yields rose on Brazilian interest rate futures <0#DIJ:> as investors bet the improved outlook for Brazil's growth following the Chinese data could prompt higher borrowing costs in the months ahead.

But the market showed that traders are now convinced that the central bank will announce at the end of its meeting on Wednesday that it will hold Brazil's benchmark interest rate at 10.75 percent.

That would put an end to a monetary tightening cycle that the central bank began in April, helping to cool a red-hot economy by raising the country's interest rate by a total of 2 percentage points.

The yield on the contract due January 2012 DIJF2, one of the most heavily-traded contracts of the early session, rose to 11.34 percent from 11.27 percent.

(Additional reporting by Froilan Romero in Santiago; Editing by Padraic Cassidy)