Brazil stocks rally along with Wall Street

BRASILIA, June 25 (Reuters) - Brazil's stocks rallied, after great volatility in early trading, led by heavyweights Petrobras and Vale and tracking shares on Wall Street higher.

Brazil's Bovespa stock index .BVSP jumped 2.2 percent to 50,762 points after choppy morning trading. The index is in negative territory for the month after three consecutive months of gains.

The real currency (BRBY) strengthened 0.86 percent to 1.965 per dollar as the optimism raised appetite for riskier emerging market currencies.

Trade has been volatile in recent sessions as investors sift through mixed data at home and abroad to try to determine whether or not the world economy is on a firm path to recovery.

The gains mirrored those on Wall Street as investors chose to focus on the positive bit of mixed economic data.

Numbers showed the U.S. economy shrank slightly less in the first quarter than previously thought but other data showed the number of workers filing for new claims for jobless benefits unexpectedly rose last week, signaling a continued weakness in the U.S. labor market.

The overall positive mood boosted energy and metal prices, propelling commodity stocks higher.

Petrobras (PETR4.SA), the index's biggest weighted gainer, jumped 2.1 percent to 31.65 reais as oil prices rose more than 2 percent.

Mining giant Vale (VALE5.SA) rose 1.63 percent to 29.95 reais as copper prices gained nearly 2 percent. The company's chief executive Roger Agnelli said on Thursday Vale was in no rush to finish iron ore price talks with Chinese steelmakers and saw little possibility they could buy ore on spot markets. See [ID:nN25263152].

Higher metal prices also boosted steelmakers with Usiminas (USIM5.SA), Gerdau (GGBR4.SA) and CSN (CSNA3.SA) gaining between 2 and 3 percent.

Financial stocks also rose. Banco Bradesco (BBDC4.SA) 2.9 percent higher at 28.49 reais, Itau Unibanco (ITUB4.SA) rising 2.2 percent to 30.40 reais and Banco do Brasil (BBAS3.SA) up 3.2 percent at 20.69 reais.

Brazil's central bank said on Thursday it had extended to February 2010 from October 2009 a $30 billion swap line with the U.S. Federal Reserve. The Fed also extended foreign exchange swap lines with several other central banks.

Gol Linhas Aereas (GOLL4.SA) was the biggest percentage gainer one day after Chief Executive Constantino de Oliveira Jr said Brazil's second-largest airline has a "substantially" better cash position in the second quarter than the first three months of the year. See [ID:nN24277994].

Oliveira told Reuters in an interview on Wednesday that the period of low liquidity and low cash generation "is over".

Gol shares rallied 5.8 percent to 11.30 reais and elsewhere in the sector, Tam (TAMM4.SA) jumped 3.8 percent to 20.54 reais.

Interest rare futures <0#DIJ:> were mixed with the central bank still expected to reduce borrowing costs further, albeit in smaller doses, as data at home continued to come in mixed.