UPDATE 2-Brazil auto sales hit record in 1st half of 2011

* Sales could accelerate in second half of the year

* Anfavea eyes impact of recent policy tightening

* Auto sales reach record 1.74 mln units in H1 -Anfavea

* Italy's Fiat leads the market again in June (Adds comments by Anfavea president, context)

By Alberto Alerigi Jr.

SAO PAULO, July 6 (Reuters) - Automobile sales in Brazil surged to a record in the first half of the year, industry data showed on Wednesday, indicating that central bank steps to curb credit are doing little to slow demand for new vehicles.

Sales jumped 10 percent to 1.74 million vehicles in the January-through-June period, while total output of new cars and trucks rose 4.1 percent to 1.71 million units, according to the national automakers' association Anfavea.

Production lagged sales in the period as manufacturers struggled to keep up with surging demand due to a shortage of skilled labor and a recent flurry of stoppages at some factories by workers demanding higher wages and bonuses.

Brazil's central bank raised interest rates this year to the highest level since late 2008 to put the brakes on the fastest economic expansion in a quarter century and curb inflation. If the impact of such tightening turns out to be less intense than previously projected, Anfavea could raise sales estimates for this year, said the group's president.

"Because of the measures, the car market will likely not rise beyond last year's numbers," Cledorvino Bellini, who is the president of Fiat Spa's Brazilian unit as well as president of the industry group, told reporters. He said Anfavea has an "upward bias" on sales projections for 2011.

Brazil has become one of the world's hottest auto markets in recent years, prompting global automakers to pour money into the country in hopes of profiting from an economic and credit boom that is lifting millions into the middle class.

Part of the surge in sales was due to a low base of comparison from last year, especially from the April-through-June period, Anfavea said.

Exports of Brazilian-made cars and trucks also surged in the first half of 2011, jumping 25 percent to $7.2 billion, Anfavea said. The increase came despite a strong local currency, which has made Brazilian-made goods less competitive on global markets.

Brazil's economy grew at its fastest pace in more than two decades in 2010, expanding 7.5 percent. The economy is slowing in 2011 but is still on track to grow about 4 percent this year, a more sustainable pace for a country like Brazil with massive infrastructure problems and sky-high interest rates.

Still, auto sales cooled in June, totaling 304,333 units, a 4.5 percent drop from May, due in part to calendar effects. Production also slipped 2.8 percent last month, to 295,605 vehicles, while exports fell 9.1 percent to $1.24 billion, Anfavea said. Sales had jumped 10.1 percent and output 8.4 percent in May.

FIAT HOLDS ON TO TOP SPOT

Brazil is a key market for the world's biggest automakers, including Italy's Fiat SpA (FIA.MI), Germany's Volkswagen AG (VOWG.DE) and U.S.-based General Motors Co (GM.N) and Ford Motor Co (F.N). Asian automakers from Japan, South Korea and now China are also boosting their presence in Brazil.

Fiat held onto the top spot in Brazil's auto market in June, selling 67,216 vehicles, a 0.6 percent increase over May.

Volkswagen came in second with sales of 57,113 vehicles, down 8.9 percent from the previous month. Volkswagen recently suffered a 37-day strike at one of its plants in southern Brazil, hurting output.

GM ranked third in the market in June, selling 53,583 vehicles, down from 55,571 in May. Ford's sales in Brazil totaled 26,849 last month, down 1.7 percent from May. (Additional reporting by Cesar Bianconi, Writing by Todd Benson and Guillermo Parra-Bernal, editing by Gerald E. McCormick, Gary Hill)