Brazil stocks fall on global jitters, real firms

SAO PAULO, May 9 (Reuters) - Brazilian stocks tumbled early on Friday in tandem with global markets on surging oil prices and renewed concerns about the credit crisis, while the local currency firmed slightly after a recent slump.

The Bovespa index .BVSP of the Sao Paulo stock exchange fell 1.08 percent to 68,965.86 points, dragged down by slumping banking and airline shares. Even with the losses, the Bovespa has risen about 8 percent this year.

The Brazilian real BRBY, which weakened in the last four sessions, also fell in early trading but reversed course on increased dollar inflows. The real firmed 0.35 percent to 1.688 to the greenback.

"Once the real gets above 1.70, it's hard for it to maintain that level because dollar inflows are still strong," said Marcelo Voss, chief economist at Liquidez, a Sao Paulo brokerage firm.

Investment flows to Brazil, Latin America's largest economy, are expected to keep growing now that the country won an international seal of approval with an investment-grade credit rating from Standard & Poor's.

An increase in dollar inflows will likely further prop up the real, which is trading near its strongest level in nine years and has proven to be less susceptible than the Bovespa to market jitters.

Brazilian stocks got off to a rocky start after markets slumped in Japan, Europe and the United States on surging oil prices and worries about the financial sector following record losses at the world's largest insurer, U.S.-based AIG (AIG.N: Quote, Profile, Research).

Concerns that rising inflation at home will prompt Brazil's central bank to further raise interest rates also weighed on the Bovespa.

Data released on Friday showed that the benchmark IPCA consumer price index jumped 0.55 percent in April after rising 0.48 percent in March, lifting 12-month inflation well above the government's year-end target of 4.5 percent.