Vale leads Brazil stocks higher, real weakens

*Stocks edge higher, led by Vale and Banco do Brasil

*Real weakens after three sessions of gains

*Interest-rate futures rise on inflation worries

SAO PAULO, May 14 (Reuters) - Brazilian stocks rose on Wednesday for the third straight session, buoyed by mining company Vale and Banco do Brasil, but the currency weakened on expectations of increased intervention by the Treasury in the foreign exchange market.

The Bovespa index .BVSP of the Sao Paulo stock exchange was up 0.62 percent at 70,939.15 points in midday trading, putting it on track to close at its third consecutive all-time high. Vale and Banco do Brasil led the market higher, each climbing more than 1 percent.

The Brazilian real BRBY, however, backtracked slightly following three sessions of gains. The real was off 0.3 percent at 1.662 per U.S. dollar, slipping after Finance Minister Guido Mantega said on Tuesday that the Treasury would buy dollars on the spot market to help raise money for a new sovereign wealth fund.

Mantega also said the fund would ease upward pressure on the real, which is trading near a nine-year high, since it will soak up part of the flood of dollars flowing into Brazil.

"The government is going to absorb billions of dollars from the market. That's a fact," said Renato Schoemberger, a currency trader at Alpes Corretora in Sao Paulo.

Interest-rate futures <0#DIJ:> on the BM&F commodities and futures exchange in Sao Paulo were mostly higher, reflecting concerns that Brazil's central bank will have to raise its benchmark lending rate again in June to curb resurgent inflation.