UPDATE 1-Brazil economic activity bounces back in January -central bank
* IBC-Br index up 1.29 percent, above forecasts
* Strongest monthly rise since June 2008
* December revised down to a fall of 0.45 percent
BRASILIA, March 15 (Reuters) - Brazil's economic activity rose strongly in January, central bank data showed on Friday, suggesting the still moderate recovery of Latin America's largest economy is gaining momentum after a surprisingly weak performance in December.
The central bank's IBC-Br economic activity index rose 1.29 percent in January from December in seasonally adjusted terms, rebounding from a decline of 0.45 percent in December. The December figure was revised downwards from a previous increase of 0.26 percent, halting a string of three consecutive monthly rises that started in October.
The January jump was well above the 0.90 percent median estimate of 17 analysts surveyed by Reuters. It was also the strongest monthly rise since June 2008.
President Dilma Rousseff's government has struggled to support a sluggish economy after a slew of stimulus measures that include tax breaks, subsidized lending and record low interest rates. The Brazilian economy grew 0.9 percent in 2012, slowing from 2.7 percent in 2011 and 7.5 percent the previous year.
The IBC-Br report for January, as well as other economic data for that month, suggest the economy is starting to respond to that stimulus.
For example, retail sales expanded a moderate 0.6 percent in January, bouncing back from a decline of 0.4 percent in December, government data showed on Thursday. Consumer demand has been the main motor of the Brazilian economy as investment lags.
The IBC-Br index, a gauge of activity in the farming, manufacturing and services sectors, rose a non-seasonally adjusted 3.84 percent over the same month a year ago.