Brazil's Bovespa rises to record, real gains 1 pct

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SAO PAULO, May 12 (Reuters) - Brazil's stock market rose to a record on Monday led by shares of mining company Vale as prices of copper and industrial metals gained, while the national currency rallied more than 1 percent on dollar inflows.

The benchmark Bovespa index .BVSP of the Sao Paulo stock exchange rose 1.11 percent to 70,415.81 points, passing a previous closing record of 70,195 points on May 6. Pulp producer Aracruz surged nearly 6 percent on expectations over a change in its ownership structure.

Local stocks also benefited from a rally in U.S. equities that increased investors' appetite for emerging market securities. The Dow Jones industrial average rose about 1 percent and the Nasdaq Composite Index gained 1.76 percent.

"Brazil's stock market is among the most favored by foreign investors every time the outlook abroad improves, and this time it was no different," said Luiz Gustavo Medina, a partner at M2 Investimentos.

The real BRBY strengthened 1.26 percent to 1.665 per U.S. dollar, gaining for the second straight session on expectations of increased dollar inflows following the recent decision by Standard & Poor's to grant Brazil a long-sought investment-grade credit rating.

With the real already trading near its strongest level in nine years, the market has been rife with speculation that the government might raise the so-called IOF financial transactions tax on foreign investment to curb the currency's gains.

Those concerns have eased in recent days as government officials have distanced themselves from the proposal, helping to prop up the real.

"That period of strong declines in the currency is gone," said Marcos Forgione, an analyst at the Hencorp Commcor brokerage. "We are having foreign inflows and the Bovespa is rising."