Brazil stocks little changed, real up on Fed cut

SAO PAULO, Dec 17 (Reuters) - Brazil's currency strengthened and stocks seesawed near the unchanged mark on Wednesday led by Petrobras, mining giant Vale and steelmakers after the U.S. Federal Reserve's unprecedented move to cut borrowing costs to a record low the previous day.
The Bovespa index .BVSP of the Sao Paulo stock exchange firmed 0.1 percent to 40,033.96 points, surpassing the 40,000 mark for the first time in six weeks. The index surged 4.4 percent the previous session.
Bellwether stocks Petrobras and Vale rose as investors snapped up widely traded Brazilian shares after the Fed cut even as prices of crude oil, copper and other industrial metals declined.
The Fed lowered on Tuesday its target for the federal funds rate to a range of zero and 0.25 percent and said it was willing to keep rates low for an extended period of time. Lower rates in the United States tend to boost the appeal of high-yield assets in Brazil and other emerging markets.
The dollar fell broadly on Wednesday, hitting a 2 1/2-month low against the euro and heading toward a 13-year low versus the yen after the Fed cut. The greenback slumped 1.3 percent against a basket of major global currencies .DXY.
Brazil's currency, the real BRBY, gained 0.7 percent to 2.355 per dollar as investors dumped the U.S. currency around the world after the Fed cut.
Yield spreads on the Brazilian government's overseas bonds over comparable U.S. Treasuries, as measured by JPMorgan's EMBI+ index, fell sharply, reflecting a decline in investors' risk aversion toward Brazilian assets. The index 11EMJ showed the country's bond spread narrowed by 19 basis points to 484.
Interest rate futures <0#dij:> also fell, reflecting the gains in Brazil's currency and stock markets and speculation that the central bank will cut its benchmark Selic rate as soon as next month.
In the stock market, Petrobras (PETR4.SA: Quote, Profile, Research, Stock Buzz) rose 1.7 percent to 24.21 reais. Mining company Vale (VALE5.SA: Quote, Profile, Research, Stock Buzz) climbed 1.3 percent to 26.27 reais.
CSN (CSNA3.SA: Quote, Profile, Research, Stock Buzz) gained 1.9 percent to 31.08 reais, leading steelmakers higher on expectations low borrowing costs in the United States may help stoke demand for Brazilian steel exports. Usiminas (USIM5.SA: Quote, Profile, Research, Stock Buzz) was up 0.6 percent to 28.65 reais and Gerdau (GGBR4.SA: Quote, Profile, Research, Stock Buzz) rose 1.1 percent to 16.4 reais.
(Reporting by Elzio Barreto, Editing by Chizu Nomiyama)