Brazil stocks steady, real firms awaiting Fed

(Updates to close)

SAO PAULO, June 24 (Reuters) - Brazilian stocks seesawed sharply and closed lower on Tuesday after a fall in banking shares, but the currency strengthened amid expectations the U.S. Federal Reserve will maintain its key rate on Wednesday.

The Sao Paulo Stock Exchange's benchmark Bovespa index .BVSP eased 0.73 percent to 64,167 points after closing practically unchanged the previous day.

The Brazilian currency BRBY, the real, strengthened 0.62 percent to 1.603 per U.S. dollar, near its strongest closing level since Jan. 20, 1999. The real retreated marginally on Monday. The dollar was also losing ground abroad after Monday's rise.

The central bank said on Monday that net inflows this month totaled $1.653 billion through June 19.

Traders said the real gained on strong dollar inflows but failed to break through the psychological mark of 1.6 in anticipation of the Federal Reserve decision on interest rates.

"People will hardly take any stronger positions before 3:15 p.m." local time on Wednesday when the Fed decision is announced, said Marcelo Voss, chief economist at Liquidez brokerage.

Interest rate futures <0#DIJ:> on the BM&F commodities and futures exchange in Sao Paulo retreated for shorter maturities and rose for some longer-term contracts.

In the stock market, traders said foreigners were mostly selling off Brazilian assets while awaiting the Fed's decision and skimming profits after a rally earlier this month.