Brazil stocks fall, currency seesaws after auctions

SAO PAULO, Dec 3 (Reuters) - Brazilian stocks fell on Wednesday as weak economic data abroad fueled fresh concern about the world economy, while the country's currency seesawed after the central bank offered dollars on the spot market.

The Sao Paulo Stock Exchange's benchmark Bovespa index .BVSP lost 2.01 percent to 34,298.92 after closing 0.75 percent higher the previous session.

Surveys showing the euro zone and UK service sectors fell deeper into recession in November increased risk aversion and scared investors away from riskier emerging market assets.

Commodity stocks were the biggest drag on the index.

Shares of state-run oil company Petrobras (PETR4.SA) fell 1.37 percent to 18.05 reais, while those of mining company Vale (VALE5.SA) lost 2.67 percent to 21.89.

The Brazilian oil giant said on Wednesday it expected to raise more than $1 billion on the international capital market in December for investments in 2009.

Vale's managing director of iron ore sales, Fidel Blanco, said in a conference in Paris the company did not expect raw material prices to soar next year due to the global financial crisis.

"We have a credit crunch, contraction in the economy, huge destockings taking place of raw materials and the demand is really dull," he said.

TIM Participacoes (TCSL4.SA), the Brazilian unit of Telecom Italia (TLIT.MI), plunged 7.55 percent to 3.43 reais after Europe's fifth-biggest telecoms provider said it would keep its unit in Brazil.

TIM shares have jumped in recent days on reports that Telecom Italia could sell its Brazilian business unit.

In the foreign exchange market, the Brazilian real BRBY was 0.92 percent weaker at 2.411 per U.S. dollar even after Brazil's central bank offered dollars in two auctions on the spot market to supply liquidity. The currency had weakened more than 2 percent early in the session.

"Dollar outflows are still strong," said Rodrigo Nassar, head of trading at the Hencorp Commcor brokerage.

The central bank also sold $1.96 billion in dollar repurchase agreements in an auction on Wednesday aimed to improve credit to exporters.

The real has shed more than a third of its value since hitting a nine-year high in August.

Interest-rate futures <0#DIJ:> at the BM&F commodities and futures exchange were lower across the curve, as investors waited for next week's monetary policy meeting where the central bank is widely expected to keep its benchmark lending rate on hold at 13.75 percent. (Reporting by Renato Andrade; Additional reporting by Denise Luna in Rio de Janeiro)