Brazilian stocks little changed, real weakens

(Updates to close)

SAO PAULO, Nov 10 (Reuters) - Brazilian stocks were little changed at the close on Tuesday as optimism about Brazil's long-term growth prospects came up against a bout of profit-taking that kept stocks negative most of the day.

The benchmark Bovespa index .BVSP squeaked out a gain of 0.13 percent to 66,303.48 as a rise by state-run oil giant Petrobras helped offset a drop by mining company Vale.

The index dipped most of the day as investors booked profits on a 2.71 percent jump the day before.

"Yesterday things went up quite a bit," said Julio Hegedus Neto, an economist at consulting firm Lopes Filho & Associados. Investors were looking at the short-term horizon in putting profits from those gains in their pockets, he added.

But, he noted, investors looking at a longer-term horizon expect Brazil to keep growing through the rest of this year and into the next.

Brazil's currency, the real (BRBY), weakened 0.88 percent to 1.717 per dollar. Brazil's finance minister, Guido Mantega, said at a televised event in Sao Paulo that the real has become overvalued as foreign inflows have poured dollars into Brazil. [ID:nN10303818]

Brazil welcomes foreign investments in the stock market, in direct investment and more, but "we don't want exaggerated inflows," he said. "We now have an overvaluation" of the Brazilian currency.

The real has gained about 36 percent against the dollar so far this year.

Investors in U.S. stocks paused, as well, with those markets flat in the late afternoon. Brazilian investors often look to those markets to gauge international sentiment and risk appetite.

In the Bovespa index, Petrobras (PETR4.SA) gained 0.89 percent to 37.41 reais. That stock is the most heavily-weighted in the Bovespa index.

Brazilian lawmakers are expected to act in coming weeks on legislation that would overhaul the country's oil regulations ahead of tapping massive offshore subsalt reserves.

Banks reversed losses earlier in the day to close higher. Itau Unibanco (ITUB4.SA), the country's largest private-sector bank, advanced 1.29 percent to 37.83 reais; Bradesco (BBDC4.SA) rose 0.56 percent to 35.70 reais and Banco do Brasil (BBAS3.SA), Latin America's largest bank by assets, climbed 1.1 percent to 31.24 reais.

Vale (VALE5.SA), the world's largest iron ore producer, slipped 0.81 percent to 42.65 reais.

Changes in yields on Brazilian interest rate futures contracts <0#DIJ:> were mixed, with many contracts either remaining flat or ticking higher.

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. (Reporting by Luciana Lopez; Editing by Kenneth Barry)