Brazil stocks fall on mixed data, real gains

SAO PAULO, July 14 (Reuters) - Brazilian stocks fell in early trading on Tuesday as a slump in U.S. consumer confidence reignited concerns over the strength of the global economic recovery.

The benchmark Bovespa index .BVSP lost 0.9 percent to 48,736.29, after a slight decline of 0.07 percent on Monday. Brazil's currency, the real (BRBY), gained 0.3 percent to 1.976 reais per dollar.

While retail sales grew 0.8 percent in May from April, ahead of expectations, according to newly-released government data, gloom in the United States proved the motivating factor for many investors.

Investor's Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP Economic Optimism Index dropped to 46.3 in July from 50.8 in June, reflecting pessimism in the United States among consumers battered by job losses and wary of the effectiveness of government interventions. [ID:nNYS005232]

"The hope that maybe the margin was improving just isn't coming through," said Andre Perfeito, an economist with Gradual Investimentos.

Growth numbers from China, due later in the week, will also affect investor sentiment as Brazil becomes more intertwined with the Asian nation, traders said. China became Brazil's main single trading partner this year, accounting for more than 8 percent of Brazilian export purchases.

Yet the retail numbers gave investors cause for optimism.

"Consumption is still very resilient," said Luiza Rodrigues, an economist with Santander. "The effect of the global economic crisis is still small on retail."

Leading losses were state-controlled energy giant Petrobras (PETR4.SA), which fell 0.9 percent to 29.55 reais, and mining company Vale (VALE5.SA), which declined 0.9 percent to 27.99 reais. Vale agreed to sell land and timber assets to paper and pulp maker Suzano Papel e Celulose (SUZB5.SA) for at least 235 million reais ($145 million).

Petrobras and Vale have the highest weighting in the Bovespa index. Suzano shares were flat at 14.30 reais.

Airline TAM (TAMM4.SA) rose 3.1 percent to 21.44 reais. Merrill Lynch upgraded the stock to buy from neutral, citing the appreciation of the real.

Shares of rival Gol (GOLL4.SA) gained 0.8 percent to 11.94 reais. Merrill Lynch also upgraded the stock to buy from underperform.

YIELDS

Yields on Brazilian interest rate futures contracts <0#DIJ:> largely slid. The contract due January 2011 DIJF1, among the most highly-traded, slipped to 9.85 percent from 9.86 percent.

The central bank's monetary policy committee, known as Copom, will meet on July 21 and 22 to discuss short-term interest rates.

Analysts expect policymakers to reduce the benchmark interest rate, the Selic, even further from its current record-low of 9.25 percent, though the bank has signaled rate cuts may be nearing an end.

(Reporting by Luciana Lopez, Editing by Guillermo Parra-Bernal)