* January current gap $11.37 bln vs $8.4 bln in December
* Foreign direct investment falls to $3.7 bln in January
By Alonso Soto
BRASILIA, Feb 22 (Reuters) - Brazil's current account deficit surged to a record high in January, outpacing foreign direct investment for the third straight month due to a widening trade gap, central bank data showed on Friday.
Brazil posted a current account deficit of $11.371 billion in January, well above the $8.413 billion deficit registered in December and market expectations of $9.6 billion.
The large gap had been expected due to a soaring trade deficit, which hit an all-time monthly high of $4.4 billion in January. Behind the surging trade deficit was an accounting change which tallied billions of dollars of fuel imports from 2012 in this year's balance, trade officials said.
The widening gap between the current account deficit and foreign direct investment (FDI) has raised the question of whether Brazil can continue to cover the shortfall with FDI, whose growth has stagnated since a jump in late 2010.
Foreign direct investment in Latin America's largest economy was $3.703 billion in January, down from a previously reported $5.358 billion in December and less than the expected $4.5 billion.
The central bank's head of economic research, Tulio Maciel, said FDI flows usually slow at the start of the year, but pick up throughout the year. He expects the current account gap to outpace FDI yet again in February, but sees a reversal in that trend starting in March.
The country is expected to post trade deficits in February and March because of $2.9 billion worth of fuel imports from 2012 that will be included in the balance of those months, trade officials said last month.
The central bank expects foreign direct investment to fully cover a current account gap estimated at $65 billion this year.
The current account is a country's broadest measure of foreign transactions encompassing trade, profit remittances, interest payments and other items.
While Brazil has recently run a string of current account deficits, this has been amply compensated in Brazil's foreign accounts by massive foreign direct investment, which is tallied in the capital account of the balance of payments.
The current account deficit in the 12 months through January was equal to 2.58 percent of the country's gross domestic product, the central bank said, up from a previously reported 2.40 percent in December.
Adding to the current account gap in January was $1.6 billion that Brazilians spent while traveling abroad and more than $2 billion in profits and dividends that foreign companies repatriated to their headquarters abroad.
Brazil has more than $376 billion in international reserves, which could be used to finance its current account balance of payments.