Brazilian shares close up on banks, commodities

(Updates to close)

SAO PAULO, Nov 3 (Reuters) -- Brazilian shares closed higher on Tuesday, helped by gains in commodities and strong results from heavyweight bank Itau Unibanco.

The Bovespa index .BVSP added 1.78 percent to close at 62,643.23 on the first day of trading this week after a national holiday.

The Brazilian stock market had been closed on Monday, shares in Latin America's largest economy on Tuesday caught up to gains posted abroad the previous day, including in the Dow Jones industrial average .DJI.

"This is a reaction to yesterday," said Daniel Marques, an analyst with Agora Corretora. The market had also fallen steeply on Friday, shedding 3.41 percent.

Brazil's currency, the real (BRBY), strengthened 0.57 percent to 1.746 per dollar.

Commodities also helped, Marques noted, particularly affecting Brazilian steelmakers. The 19-commodity Reuters-Jefferies index .CRB added 1.09 percent. The Bovespa index includes a number of stocks tied to the trade of raw materials.

Gains were led by Vale (VALE5.SA), the world's largest iron ore producer, which advanced 3.83 percent to 40.96 reais.

Banks also rose, led by Itau Unibanco (ITUB4.SA), Brazil's largest private-sector bank by assets, which jumped 5.32 percent to 35.26 reais after it posted an unexpected increase in third-quarter profits. For more see [ID:nL3573578].

Rival banks also advanced. Banco do Brasil (BBAS3.SA) climbed 3.08 percent to 29.08 reais and Bradesco (BBDC4.SA) gained 2.14 percent to 35.30 reais.

Steelmaker Gerdau (GGBR4.SA) added 1.18 percent to 26.61 reais and CSN (CSNA3.SA), which is expected to release third-quarter results later in the day, moved up 0.51 percent to 58.60 reais.

State-controlled energy company Petrobras (PETR4.SA) gained 1.46 percent to 35.55 reais, helped by a 1.88 percent rise in crude oil CLc1 on the back of rising U.S. factory orders, a gold futures rally and and technical support. [ID:nN03455490]

Limiting a rise in the Bovespa, plane maker Embraer (EMBR3.SA) tumbled for a second day, shedding 1.12 percent to 8.84 reais.

Bank of America Merrill Lynch analysts said in a report the company is braced for a few quarters of weak profit margins and increasing competitive pressures [ID:nN03483926].

Yields on Brazilian interest rate futures contracts <0#DIJ:> were broadly lower.

Investors use the contracts to bet on trends in the country's benchmark interest rate, the Selic, currently at a record-low 8.75 percent.

Analysts expect central bank policy makers to keep the rate steady through 2009 and perhaps beyond. (Reporting by Luciana Lopez and Peter Murphy; Editing by Leslie Adler)