UPDATE 2-Brazil's VisaNet shares soar after record IPO

* Shares jump as much as 15.7 pct on first day of trading

* Investors say gains reflect bet on Brazilian recovery

* Shares of competitor Redecard tumble 4.3 pct (Updates to close)

By Elzio Barreto and Guillermo Parra-Bernal

SAO PAULO, June 29 (Reuters) - Shares of VisaNet, the Brazilian affiliate of credit card network Visa Inc (V.N), surged as much as 15.7 percent in the first trading day after its record-setting initial public offering last week.

The stock (VNET3.SA) closed 11.8 percent higher than the 15.00 reais IPO price set last Thursday, at 16.77 reais, after trading as high as 17.35 reais earlier. About 2.88 billion reais ($1.48 billion) worth of VisaNet stock changed hands in Sao Paulo, or 45 percent of the day's total trading volume at the exchange.

The stock sale raised 8.4 billion reais ($4.3 billion), making it the largest IPO ever in Brazil and the world's biggest in the past year.

VisaNet's performance reflects optimism that more Brazilians will use credit cards as the economy bounces back faster than in some other emerging markets and developed economies, investors said. Brazil's credit card market has expanded by about 25 percent a year since 1995, according to Itau Unibanco, the country's largest bank.

"You have three elements playing here: first, that people believe the use of banking services will grow, that more people will use their credit cards, that Brazil's economy is firmly on the rebound," said Frederico Mesnik, who manages 18 million reais at Sao Paulo-based Humaita Investimentos.

Earlier this month, the central bank cut the benchmark Selic lending rate by 100 basis points to a record low of 9.25 percent. Consumer confidence readings rose in May to their highest level since September, just when the global credit crunch afflicting the developed world spread to Brazil.

Payroll jobs rose for a fourth straight month in May, indicating that companies are returning to normal after a 655,000 net plunge in jobs in December, the government said last week.

RIVAL TUMBLES

Shares of rival Redecard (RDCD3.SA) tumbled as much as 10 percent. The drop was due to "euphoria over the start of VisaNet, rather than eroding fundamentals" in Redecard, Mesnik said.

Redecard finished 4.32 percent lower at 31.00 reais after falling as low as 29.30 reais.

Both stocks might soon "find their equilibrium price" as initial interest on VisaNet fades gradually, Mesnik said. The central bank might tighten regulation on the credit card industry, including a reduction in fees charged by credit card operators.

VisaNet shareholders -- including Banco Bradesco (BBDC4.SA), Banco Santander (SAN.MC), Banco do Brasil (BBAS3.SA) and Visa International -- sold 559.81 million shares at the top of the estimated price range of 12 reais to 15 reais.