SAO PAULO, Nov 23 (Reuters) - Brazilian stocks rose early on Monday as a weak U.S. dollar boosted commodities shares in Latin America's largest economy. The benchmark Bovespa index .BVSP added 1.4 percent to 67,255.81 in early trading, ready to tally a day of gains after a three-day holiday weekend. Comments from a U.S. Federal Reserve official on Sunday buoyed investor hopes that a looser monetary policy in the world's largest economy would continue for a while. [ID:nN22246631] Low interest rates in large economies have fueled the carry trade, in which investors borrow money in low-cost countries to invest in higher-yield markets, such as Brazil. That, in turn, has weakened the dollar and strengthened Brazil's currency, the real (BRBY: Quote, Profile, Research, Stock Buzz), which has gained about 35 percent so far in 2009. On Monday the real strengthened 0.58 percent to 1.723 per dollar as the greenback slid 0.9 percent against a basket of major currencies .DXY. A weaker dollar also generally helps raw materials. The 19-commodity Reuters-Jefferies index .CRB climbed 1.17 percent on Monday. "The weakening of the dollar and the gain in commodities, helps several emerging markets, including Brazil," said Andre Luis Querne, a partner at Rio Gestao de Recursos. Nevertheless, he noted, advances in the Bovespa index were "well distributed" among a variety of companies, showing that domestic demand in Brazil was also a strong factor in the country's economic rebound. "It's the continuation of international liquidity," Querne said. "It looks like the markets are still moving higher." Among heavyweight gainers in the Bovespa index were state-controlled energy giant Petrobras (PETR4.SA: Quote, Profile, Research, Stock Buzz) and mining company Vale (VALE5.SA: Quote, Profile, Research, Stock Buzz). Petrobras added 1.6 percent to 39.13 reais as crude oil CLc1 advanced 2.49 percent on the back of the weaker dollar. Vale, the world's largest producer of iron ore, rose 1.53 percent to 43.15 reais. "Our base case scenario is for a slow recovery in the global economy helping metals demand, with a small but not insignificant risk of a disruption in China. As such, we have an 'outperform' rating on iron ore mining companies but recommend a degree of caution," according to a Bradesco report dated Monday. Steelmakers also gained. Gerdau (GGBR4.SA: Quote, Profile, Research, Stock Buzz) added 1.38 percent to 28.68 reais, Usiminas (USIM5.SA: Quote, Profile, Research, Stock Buzz) moved up 1.44 percent to 50.13 reais, and CSN (CSNA3.SA: Quote, Profile, Research, Stock Buzz) climbed 0.96 percent to 60.80 reais. Shares in retailers rose as well. Lojas Americanas (LAME4.SA: Quote, Profile, Research, Stock Buzz) saw gains of 1.75 percent to 13.99 reais and Lojas Renner (LREN3.SA: Quote, Profile, Research, Stock Buzz) climbed 2.08 percent to 37.35 reais. Yields on Brazilian interest rate futures contracts <0#DIJ:> were little changed with a number of contracts trading flat. The yield on the contract due January 2011 DIJF1 inched to 10.19 percent from 10.16 percent. The yield on the contract due July 2011 DIJN1 edged to 11.12 percent from 11.11 percent. Both were among the morning's most highly-traded contracts. 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 Padraic Cassidy) ((luciana.f.lopez@thomsonreuters.com; Reuters Messaging: luciana.f.lopez.thomsonreuters.com@reuters.net; Tel: +5511-5644-7756))

Source